Court File No. CV12-9767-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A"
Applicants
MOTION RECORD (Motion Returnable August 21, 2012)
GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7 Robert J. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹:58251A
Tel: 416.979.2211 Fax: 416.979.1234
Lawyers for the Applicants l Court File No. CV12-9767-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.19S5, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A"
Applicants
INDEX
Tab., ': : '.,:,:.:;--'-.';:,.;.,Docum'ent
Notice of Motion dated August 14, 2012
Affidavit of John H. Bell August 14, 2012
A Exhibit A —Asset Purchase Agreement dated June 22, 2012 among Cinram International Inc. and Cinram Group Inc., formerly Cinram Acquisition, Inc. (without schedules or exhibits)
B Exhibit B —Approval and Vesting Order of the Ontario Superior Court of Justice (Commercial List) dated July 12, 2012
C Exhibit C —Order (I) Recognizing the Canadian Sale Order, (II) Authorizing and Approving the Sale Free and Clear of all Liens, Claims, Encumbrances, and Other Interests, (III) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief of the United States Bankruptcy Court for the District of Delaware dated July 25, 2012 Exhibit D —Listed Closing Assigned Contracts
Exhibit E —Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 6, 2012
Exhibit F —Supplement to Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 13, 2012
Exhibit 6 —Second Supplement to Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 18, 2012
Exhibit H —Third Supplement to Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 19, 2012
Exhibit I —Fourth Supplement to Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 20, 2012
Exhibit J —Fifth Supplement to Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 23, 2012
Exhibit K —Sixth Supplement to Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors dated July 24, 2012
Exhibit L —Affidavit of John Bell sworn June 23, 2012 (without exhibits) Exhibit M —Affidavit of Mark Hootnick sworn June 23, 2012 (without exhibits)
Exhibit N —Presentation of Najafi Companies re: Cinram Acquisition dated July 2012
Draft Assignment Order SCHEDULE "A"
Additional Applicants
Cinram International General Partner Inc.
Cinram International ULC
1362806 Ontario Limited
Cinram (U.S.)Holding's Inc.
Cinram, Inc.
IHC Corporation
Cinram Manufacturing LLC
Cinram Distribution LLC
Cinram Wireless LLC
Cinram Retail Services, LLC
One K Studios, LLC I
f Court File No. CV12-9767-00C!.
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES'EEDITORS ARRAWGEMElVT ACT, R.S.C.19S5,c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THK COMPANIES MISTED IN SCHEDULE "A"
NOTICE OF MOTION (returnable August 21, 2012)
The Applicants will bring a motion before a Judge of the Commercial List on August 21, 2012, at 10:00 a.m. or as soon after that time as the matter may be h'card at 330 University Avenue, Toronto, Ontario.
PROPOSED METHOD OF HEARING: The motion is to be heard orally.
1. THE APPLICANTS MAKE A MOTION FOR AN ORDER:
(a) abridging the time for and validating the service of this Notice of Motion and .he Motion Record and dispensing with further service thereof;
(b) assigning the rights and obligations of Cinram International Inc, ("CII") under certain contracts, agreements and leases to Cinram Group, Inc., formerly knowr as Cinram Acquisition, Inc. (the "Purchaser" ) and/or one or more entities nominated to take assignment of such contracts in accordance with the Asset Purchase Agreement (defined below) pursuant to section 11.3 of the Companies
Arrangement Act, R.S.C. 1985, c. C-36, as emended (the "CCAA");'reditors and
(c) such further and other relief as counsel may request and this Honourable Cou;t deems just. THE GROUNDS FOR THE MOTION ARE:
(a) On June 25, 2012, this Honourable Court made an Order (the "Initial Order" ), inter alia: (i) granting a stay of proceedings under the CCAA against the Applicants, Cinram International Limited Partnership (together with the Applicants, the "CCAA Parties" ) and the subsidiaries of the CCAA Parties that are also party to agreements to which the CCAA Parties are parties; (ii) appointing FTI Consulting Canada Inc. as the monitor (the "Monitor" ) of the CCAA Parties in these CCAA proceedings; and (iii) appointing Cinram International ULC ("Cinram ULC") as the foreign representative of the CCAA Parties.
(b) On July 12, 2012, this Honourable Court made an order (the "Approval and Vesting Order" ), inter alia: (i) approving the sale of substantially all of the property and assets used in connection with the business carried on by Cinram Fund and its direct and indirect subsidiaries (collectively, "Cinram") in North
America contemplated by an asset purchase agreement between CII and the Purchaser dated June 22, 2012 (the "Asset Purchase Agreement" ); (ii) approving the sale of the shares of Cooperatie Cinram Netherlands UA pursuant to the binding purchase offer dated June 22, 2012 (the "Purchase Offer") provided by the Purchaser to CII and 1362806 Ontario Limited (together with CII, the "Share Sellers" ); (iii) authorizing CII to enter into the Asset Purchase Agreement and the Share Sellers to enter into the Purchase Offer; (iv) authorizing CII, Cinram Inc., Cinram Retail Services LLC, One K Studios, LLC, Cinram Distribution LLC and Cinram Manufacturing LLC (collectively, the "Asset Sellers" ) to complete the transactions contemplated by the Asset Purchase Agreement (the "Asset Sale Transaction" ); and (v) authorizing the Share Sellers to complete the transactions contemplated by the Purchase Offer (the "Share Sale Transaction", together with the Asset Sale Transaction, the "Sale Transaction" ).
(c) On July 25, 2012, Cinram ULC obtained an order under chapter 15 of title 11 of the United States Code, as amended from time to time (the "Bankruptcy Code") from the United States Bankruptcy Code from the United States Bankruptcy Court for the District of Delaware (the "U.S.Court" ), inter alia, recognizin: on a final basis these CCAA proceedings as the "foreign main proceedings" of the CCAA Parties and recognizing on a final basis the Initial Order.
(d) On July 25, 2012, Cinram ULC obtained an order (the "Sale Recognitiiin Order" ) under chapter 15 of the Bankruptcy Code from the U.S. Court, inter aA'c, recognizing the Approval and Vesting Order, authorizing the assumption an!i
assignment of certain executory contracts and unexpired leases, and granting certain related relief.
(e) The CCAA Parties, with the assistance of their advisors and the Monitor, ha:,e continued to work with the Purchaser with respect to the Sale Transa~;"! ';:,.
including working to satisfy the closing conditions to the Sale Transaction.
(f) The Asset Purchase Agreement requires the Applicants to seek and obl,.n Canadian and U.S. court approval with respect to the assignment of certain contracts designated by the Purchaser for assignment and assumption prior to and after Closing.
(g) The Applicants are seeking the assignment of those contracts, agreements an,l leases relating to the business and assets being sold under the Asset Pur:.;ha, e
Agreement to which CII is a party and in respect of which consent is required '-!..t
not obtained that have been designated by the Purchaser up to and follower!g Closing for assignment and assumption in accordance with the terms of the Asset Purchase Agreement (collectively, the "Assigned Contracts" ).
(h) Assignment of contracts and agreements with Material Customers and European Material Customers (each as defined in the Asset Purchase Agreement) and
contracts designated by the Purchaser for assignment that do not require consent to assignment pursuant to their terms is not being sought as part of this motion as these will be addressed through consents in accordance with the Asset Purchase
Agreement and/or will be transferred as part of the general transfer of assets under the Approval and Vesting Order and Sale Recognition Order. -4-
(i) It is not practically possible for CII to obtain consensual assignment agreements relating to each of the Assigned Contracts to be assigned on Closing prior to the expected timing of Closing.
(j) The CCAA Parties have made extensive efforts to notify parties whose contracts, agreements and/or leases may be subject to designation for assignment and
assumption by the Purchaser in accordance with the Asset Purchase Agreement.
(k) The Purchaser intends to carry out substantially the same business as Cinram and to do that, it requires an assignment of the Assigned Contracts.
(1) The principal objectives of these CCAA proceedings include ensuring the ongoing operations of Cinram and completing the sale and transfer of substantially all of Cinram's business as a going concern to the Purchaser.
(m) The Sale Transaction represents the best available alternative in the circumstances to Cinram and its stakeholders as a whole and the best opportunity to normalize its capital structure and preserve the value of the Cinram business.
(n) The Purchaser and/or a Purchaser Nominee are able to perform the obligations under the Assigned Contracts.
(o) The Purchaser is an appropriate counterparty to these Contracts and there is no reason to believe that any prejudice will be caused to the counterparties of the Assigned Contracts as a result of the assignment thereof to the Purchaser and/or a Purchaser Nominee.
(p) All monetary defaults in relation to the Assigned Contracts will be remedied in accordance with the CCAA, the notices provided to contract counterparties and the Asset Purchase Agreement.
(q) The provisions of the CCAA, including Section 11.3,and this Honourable Court's
equitable and statutory jurisdiction thereunder. (r) Rules 2.03, 3.02, 16 and 37 of the Ontario Rules of Civil Procedure, R.R.O 1994. Rec. 194, as amended.
(s) Such further and other grounds as counsel may advise and this Honourable Court permit.
3. THE FOLLOWING DOCUMENTARY EVIDENCE %'ILL BK USED AT THE HEARING OF THK MOTION:
(a) the Affidavit of John H. Bell sworn August 14, 2012, and the exhibits attached thereto;
(b) the Second Report of FTI and any exhibits attached thereto, to be filed; and
(c) such further and other material as counsel may advise and this Honourable Court may permit.
Date: August 14, 2012 GOODMANS LLP Barristers X Solicitors Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert J. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹,58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants SCHEDULE "A"
Additional Applicants
Cinram International General Partner Inc.
Cinram International ULC
1362806 Ontario Limited
Cinram (U.S.)Holding's Inc.
Cinram, Inc.
IHC Corporation
Cinram Manufacturing LLC
Cinram Distribution LLC
Cinram Wireless LLC
Cinram Retail Services, LLC
One K Studios, LLC IN THK MATTER OF THK COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.19S5, Court File No: CU12-9767-00CL c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMKNT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants
ONTARIO SVPKRIOR COURT OF JUSTICK- COMMKRCIAL LIST
Proceeding commenced at Toronto
NOTICE OF MOTION
GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7
Robert J. Chadwick LSUCP: 35165K Melaney J. Wagner LSUCO: 440638 Caroline Descours LSUC4: 58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants I Court File No. CV12-9767-00C':,
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.19S5, c. C-36, AS AMENDED
AND IN THK MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A"
Appl icant s
AFFIDAVIT OF JOHN H. BELL &(sworn August 14, 2012)
I, John H. Bell, of the City of Toronto, in the Province of Ontario, MAKE OATH AND
I. INTRODUCTION
I am the Chief Financial Officer of Cinram International Inc. ("CII"). I am a'iso: director and/or an officer of certain of the subsidiaries that are owned either directly or indirectl-; by CII. As such, I have personal knowledge of the matters to which I depose in this Affidavit.
Where I do not possess personal knowledge, I have stated the source of my information and in .li such cases believe it to be true.
This Affidavit is sworn in support of a motion made by CII, Cinram International
Income Fund ("Cinram Fund" ), CII Trust and the companies listed in Schedule "A"
(collectively, the "Applicants" ) for an Order pursuant to Section 11.3 of the
Companies'reditors Arrangement Act, R.S.C. 1985& c. C-36, as amended (the "CCAA") in the foriri attached as Tab 3 of the Motion Record of the Applicants (the "Assignment Order" ) assigning the rights and obligations of CII under certain contracts, agreements and leases to Cinram Group,
Inc., formerly known as Cinram Acquisition, Inc. (the "Purchaser" ), or one or more entities nominated by the Purchaser to take assignment of such contracts, notwithstanding any restrictions on transfer contained in such contracts, as part of the sale of assets to the Purchaser pursuant to an asset purchase agreement between CII and the Purchaser dated June 22, 2012 (the
"Asset Purchase Agreement", a copy of which is attached hereto as Exhibit "A", without
schedules or exhibits).
As described in further detail below, there are two main categories of contracts
that are sought to be assigned pursuant to the proposed Assignment Order to the Purchaser
and/or a Purchaser Nominee in accordance with the terms of the Asset Purchase Agreement: (i)
Listed Closing Assigned Contracts, being those contracts, agreements a@4 leases designated by
the Purchaser for assignment and assumption up to the date of the Assignment Order and listed
in a schedule attached as an Exhibit hereto, as such schedule may be updated up to the date of the
Assignment Order; and (ii) any Additional Assigned Contracts, comprised of (a) those contracts,
agreements and leases designated by the Purchaser for assignment and assumption after the date
of the Assignment Order but prior to the date of Closing (as defined in the Asset Purchase
Agreement) (referred to herein as Additional Closing Assigned Contracts), and (b) any other
contracts, agreements and leases designated by the Purchaser for assignment and assumption
after the date of Closing. Only those contracts, agreements and leases to which CII is a party and
in respect of which consent for assignment is required from the counterparty will constitute the
Listed Closing Assigned Contracts and any Additional Assigned Contracts. Counterparties to all Listed Closing Assigned Contracts have been provided with a Notice Letter advising them of, among other things, the Applicants'otion seeking the proposed Assignment Order, and the proposed Assignment Order provides for further notification and objection procedures in respect of counterparties to Additional Assigned
Contracts, including Additional Closing Assigned Contracts.
As discussed below, the Listed Closing Assigned Contracts and potential
Additional Assigned Contracts have also been subject to a U.S. motion in connection with the assignment and assumption of certain executory contracts and unexpired leases of the '....S.
Debtors, which include CII, in their proceedings under chapter 15 of the Bankruptcy Code (the
"Chapter 15 Proceedings" ). The proposed Assignment Order supplements the U.S. order i;.. respect of CII, the only Canadian Asset Seller.
Unless otherwise indicated, capitalized terms used in this Affidavit (including i~ the preceding paragraphs) are as defined herein.
II. BACKGROVND
On June 25, 2012, this Honourable Court made an initial order (the Initial
Order" ), inter alia: (i) granting a stay of proceedings under the CCAA against the Applicants and Cinram International Limited Partnership (together with the Applicants, the "CCAA
Parties" ) and the subsidiaries of the CCAA Parties that are also party to agreements to which the
CCAA Parties are parties; (ii) appointing FTI Consulting Canada Inc. as the monitor (the
"Monitor" ) of the CCAA Parties in these CCAA proceedings; and (iii) appointing Cinram
International ULC ("Cinram ULC") as the foreign representative of the CCAA Parties. The stay of proceedings pursuant to the Initial Order was granted to July 25, 2012, and was subsequently extended by this Honourable Court on July 12, 2012 to September 14, 2012.
On July 12, 2012, this Honourable Court made an order (the "Approval and
Vesting Order" ), inter alia: (i) approving the sale of substantially all of the property and assets
used in connection with the business carried on by Cinram Fund and its direct and indirect
subsidiaries (collectively, "Cinram") in North America contemplated by the Asset Purchase
Agreement; (ii) approving the sale of the shares of Cooperatie Cinram Netherlands UA pursuant
to the binding purchase offer dated June 22, 2012 (the "Purchase Offer" ) provided by the
Purchaser to CII and 1362806 Ontario Limited (together with CII, the "Share Sellers" ); (iii)
authorizing CII to enter into the Asset Purchase Agreement and the Share Sellers to enter into the
Purchase Offer; (iv) authorizing CII, Cinram Inc., Cinram Retail Services LLC, One K Studios,
LLC, Cinram Distribution LLC and Cinram Manufacturing LLC (collectively, the "Asset
Sellers" ) to complete the transactions contemplated by the Asset Purchase Agreement (the
"Asset Sale Transaction" ); and (v) authorizing the Share Sellers to complete the transactions
contemplated by the Purchase Offer (the "Share Sale Transaction", together with the Asset Sale
Transaction, the "Sale Transaction" ). A copy of the Approval and Vesting Order is attached
hereto as Exhibit "B".
On July 25, 2012, Cinram ULC, in its capacity as the foreign representative for
CII and each of the Applicants that are U.S. entities (collectively, the "U.S.Debtors" ), obtained
an order under chapter 15 of title 11 of the United States Code, as amended from time to time
(the "Bankruptcy Code"), from the United States Bankruptcy Court for the District of Delaware
(the "U.S. Court" ), inter alia, recognizing on a final basis these CCAA proceedings as the "foreign main proceedings" of the CCAA Parties and recognizing on a final basis the lnit:,ji
Order.
10. On July 2S, 2012, Cinram ULC, in its capacity as foreign representative for the
U.S. Debtors, obtained an order (the "Sale Recognition Order" ) under chapter 15 of the
Bankruptcy Code from the U.S. Court, inter alia, recognizing the Approval and Vesting Orde;., authorizing the assumption and assignment of certain executory contracts and unexpired lease.. and granting certain related relief. A copy of the Sale Recognition Order is attached hereto as
Exhibit "C".
III. ASSiGNMENT OF CII CONTRACTS TO THE PURCHASER
A. Sale Transaction
The CCAA Parties, with the assistance of their advisors and the Monitor, n'-, „- continued to work with the Purchaser with respect to the Sale Transaction, including working:.o satisfy the closing conditions to the Sale Transaction and to implement appropriate trans".:..:. arrangements in respect'of assets excluded from the Asset Sale Transaction. The Asset;~a!:.,
Agreement contains a sunset date for Closing of September 15, 2012, after which the agreemenl. may be terminated. The parties are working towards an expected Closing of the Asset Sale
Transaction by the end of August 2012.
12. The Asset Purchase Agreement contemplates, among other things, that: (i) consents of Material Customers and European Material Customers (each as defined in the Asset
Purchase Agreement) will be obtained as a condition to the Closing; and (ii) Court approval is sought and obtained prior to Closing with respect to the assignment of certain designated contracts.
13. Accordingly, an assignment of contracts and agreements with Material Customers and European Material Customers is not being sought as part of the proposed Assignment Order as these will be addressed through consents in accordance with the Asset Purchase Agreement and/or will be transferred as part of the general transfer of assets under the Approval and Vesting
Order and Sale Recognition Order. Contracts designated by the Purchaser for assignment that do not require consent to assignment will also be transferred as part of the general transfer of assets under the Approval and Vesting Order and Sale Recognition Order. The relief being sought under the proposed Assignment Order is to assign the contracts designated by the Purchaser both before and after Closing in accordance with the Asset Purchase Agreement to which CII is a party and in respect of which consent is required but not obtained.
14. Below is a summary of the contract designation and assignment provisions under the Asset Purchase Agreement.
B. Contract Designation and Assignment Provisions under the Asset Purchase
Agreement
15. The Asset Purchase Agreement requires that the Applicants seek and obtain approval of this Honourable Court and the U.S. Court of the assignment to the Purchaser or one or more entities nominated to take assignment of such contracts in accordance with the Asset
Purchase Agreement (each, a "Purchaser Nominee"} of those Assumed Contracts, Real
Propert) Leases, Personal Property Leases and Assumed Employee Plans (each as defined in the -7-
Asset Purchase Agreement) designated by the Purchaser for assumption and assignment in accordance with section 9.2 of the Asset Purchase Agreement.
16. Section 9.2 of the Asset Purchase Agreement sets out the designation procedures relating to contracts and agreements, as well as the timing for notice to counterparties indicating that their contracts and agreements may be assigned and the amounts to cure any monetar', defaults thereunder. As set out in further detail in Section C below, on July 6, 2012, in connection with the U.S. motion for the Sale Recognition Order, notice was given to counterparties in respect of contracts that may be designated by the Purchaser for assumption '.~', and assignment to the Purchaser, including an estimate of proposed cure amounts. Supplementai notices were subsequently sent to "counterparties with respect to certain additional contracts 'hu; were later identified as contracts that may be designated by the Purchaser for assumption by and assignment to the Purchaser.
17. Pursuant to section 9.2 of the Asset Purchase Agreement, the Purchaser may designate at any time before or at the Closing which Assumed Contracts, Real Property Le ~scs.
Personal Property Leases and Assumed Employee Plans will be assumed by and assigned to il oi. a Purchaser Nominee at the Closing. Attached as Exhibit "D" is the list of Assumed Contracts,
Real Property Leases, Personal Property Leases and Assumed Employee Plans designated by the
Purchaser for assignment at Closing pursuant to section 9.2 of the Asset Purchase Agreement to which CII is a party and in respect of which counterparty consent is required thereunder but has not been obtained (collectively, the "Listed Closing Assigned Contracts" ).'he Listed Closing
'ontracts containing provisions permitting assignment without consent in connection with the sale of substantially all of the assets of CII do not form part of the Listed Closing Assigned Contracts but will be assigned as part of the general transfer of assets under the Approval and Vesting Order and Sale Recognition Order. Assigned Contracts do not include any contracts CII entered into following the date of the Initial
Order.~
18. The Purchaser also has the right under the Asset Purchase Agreement to supplement the list of Listed Closing Assigned Contracts by designating additional Assumed
Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans for assignment at Closing up to the Closing. To the extent the Purchaser designates any additional
Contracts between the date of this Affidavit and prior to the hearing of the motion for the
Assignment Order that would form part of the Assignment Order, the CCAA Parties will update the Listed Closing Assigned Contracts and will provide to this Court and post on the Monitor's website an updated copy of the Listed Closing Assigned Contracts. To the extent the Purchaser
designates any Contracts following the date of the Assignment Order but before or at Closing to
which CII is a party and in respect of which counterparty consent is required thereunder but has
not been obtained (referred to hereunder as the "Additional Closing Assigned Contracts" ), the
proposed Assignment Order provides a mechanism for the provision of notice to counterparties
to such Contracts and includes a right for such counterparties to object to the assignment of their
Contracts. Pursuant to the Asset Purchase Agreement, the Purchaser may remove any Contracts
designated for assignment from the list of Listed Closing Assigned Contracts or Additional
Closing Assigned Contracts at any time before or at the Closing.
19. From and after the Closing Date (as defined in the Asset Purchase Agreement) the
Purchaser may in accordance with the Asset Purchase Agreement notify CII that it is designating
'II entered into only one contract following the date of the Initial Order. Consent to assignment is not required under that contract. -9-
additional Assumed Contracts, Real Property Leases, Personal Property Leases or Assumed
Employee Plans not assigned to the Purchaser on the Closing Date (each, an "Open Contract" ) for assumption by and assignment to the Purchaser and/or a Purchaser Nominee. The Purchaser also has the right under the Asset Purchase Agreement to designate any Olyphant Contract (as defined in the Asset Purchase Agreement) after Closing for assumption by and assignment to the
Purchaser and/or a Purchaser Nominee.
20. Consistent with section 9.2 of the Asset Purchase Agreement, the drat'i.
Assignment Order contemplates that within three (3) business days of receipt of the Purchase notification of the designation of an Additional Closing Assigned Contract, Open
Contrac;:.~'lyphant Contract for assumption and assignment (collectively, the "Additional Contracts'n . each an "Additional Contract" ) to which CII is a party and in respect of which consent is required, CII shall provide notice (a "Designation Notice" ) of the designation to the applicable counterparties to such designated Additional Contract which will include the proposed an ou . that will be required to remedy any monetary default in connection with such assumption and assignment.
21. The proposed Assignment Order further contemplates that counterparties to such
Additional Contracts shall have seven (7) business days from receipt of such Designation Notice to provide notice to the Monitor and the CCAA Parties of any objection such Additional
Contract counterparty has to the assignment to and assumption by, the Purchaser and/or a
Purchaser Nominee of its Additional Contract. If no objections in respect of the assignment and assumption of Additional Contracts are received by the Monitor and the CCAA Parties within the required time period, such Additional Contracts will be assigned to the Purchaser and/or a
Purchaser Nominee pursuant to the proposed Assignment Order, If the Monitor and CCAA -10-
Parties do receive any objections in respect of the assignment and assumption of any Additional
Contracts, the CCAA Parties shall be authorized to schedule a motion with this Honourable
Court for the resolution of any such objections.
22. Pursuant to the Asset Purchase Agreement, the Asset Sellers may, on ten (10) business days'rior written notice to the Purchaser designating Open Contracts for rejection (the
"Rejection Notice" ), cause to be rejected any Open Contract set forth on such Rejection Notice, subject to the right of the Purchaser to either designate such Open Contract for assumption and assignment, or agree to reimburse the applicable Asset Seller for expenses incurred under such
Open Contract from and after the date of the Rejection Notice until the date on which the
Purchaser advises the Asset Seller of its decision with respect to assumption or rejection of such
Open Contract.
23. Section 9.2 of the Asset Purchase Agreement further provides that the Purchaser will endeavour in good faith to complete the assumption and assignment for all Open Contracts by September 15, 2012.
C. Efforts to Date in Connection with the Assignment of Contracts to the
Purchaser
24. As described below, the CCAA Parties have made extensive efforts to notify all contract counterparties in respect of all unexpired leases and executory contracts (the
"Contracts" ) related to the Purchased Assets (as defined in the Asset Purchase Agreement), including the Listed Closing Assigned Contracts, that such Contracts may be designated by the
Purchaser for assumption and assignment, including advising them of proposed amounts to cure
1 any monetary defaults thereunder. -11-
25. On July 6, 2012, in compliance with section 9.2 of the Asset Purchase Agreement,
Cinram ULC, as foreign representative of the CCAA Parties, filed with the U.S. Court and served upon counterparties to the Contracts related to the Purchased Assets, without regard as to whether the Purchaser had then designated such Contracts for assumption and assignment, a notice that such Contracts may be designated for assumption and assignment to the Purchaser in connection with the Closing (the "Assignment Notice", a copy of which is attached hereto as
Exhibit "E").
26. The Assignment Notice included cure amounts proposed to be paid to the applicable Contract counterparties in the event that such Contracts are assumed and assigned to the Purchaser at the Closing in respect of any monetary defaults in connection with such assumption and assignment. The Assignment Notice also notified the Contract counterparties of their right to object to the assumption and assignment of their respective"Gontracts. The deadline for such objections for the purposes of the U.S. motion for the Sale Recognition Order was July
20, 2012.
27. Following the filing and distribution of the Assignment Notice on July 6, 2012, the CCAA Parties identified a small number of additional Contracts related to the Purchased
Assets that were not provided with the Assignment Notice. On July 13, 2012, July 18, 2012, July
19, 2012, July 20, 2012, July 23, 2012, and July 24, 2012, supplemental notices (each of which is attached hereto as Exhibits "F", "G", "H", "I","J" and "K", respectively) were filed with the
U.S. Court and served upon the applicable Contract counterparties indicating the additional
Contracts that may be designated for assumption by and assignment to the Purchaser in connection with the Closing and/or notifying Contract counterparties of adjustments to certain proposed cure costs for certain of the Contracts included in the Assignment Notice. The - 12-
supplemental notices filed and served on July 13, 2012, July 18, 2012, July 19, 2012, July 20,
2012, July 23, 2012, and July 24, 2012, collectively with any additional supplemental notices that may be filed with the U.S. Court and delivered to applicable Contract counterparties shall be referred to as the "Supplemental Notices". The Listed Closing Assigned Contracts formed part of the contracts listed in the Assignment Notice or a Supplemental Notice issued prior to the date hereof.
A limited number of Contract counterparties filed with the U.S. Court objections to the assignment of their Contracts and/or to the amount of the cure costs indicated in the
Assignment Notice. None of the objections filed with the U.S. Court remain outstanding in
respect of the Listed Closing Assigned Contracts.
29. As noted above, on July 25, 2012, the U.S. Court, as part of the Sale Recognition
Order, approved the assignment and assumption of the Contracts of the Asset Sellers (including
CII) that are designated for assignment and assumption by the Purchaser on the Closing Date in
accordance with the Asset Purchase Agreement. Pursuant to the Sale Recognition Order, within
one (1) business day after the Closing, Cinram ULC is required to file with the U.S. Court a list
of all of the Contracts. for which the U.S. Court authorized and approved assumption and
assignment that were actually assumed by and assigned to the Purchaser on the Closing.
30. On August 10, 2012, a further notice (the "Notice Letter" ) was distributed to the
counterparties of the Contracts to which CII is a party, other than to the Material Customers and
the European Material Customers, advising them of: (i) the Applicants'otion before this
Honourable Court pursuant to Section 11.3 of the CCAA for the assignment and assumption of
'I 'ith the exception of two contracts recently added in respect of which a Notice Letter was sent to the applicable counterparty as set out below. -13-
Contracts designated by the Purchaser for assignment at Closing to which CII is a party and i..; respect of which counterparty consent for assignment is required thereunder and of any
Additional Contracts designated by the Purchaser to which CII is a party and in respect of which counterparty consent for assignment is required thereunder (collectively, the "Additional
Assigned Contracts" and each an "Additional Assigned Contract" ); (ii) the availability
oI'ourt materials filed in connection with this Motion, including the Motion Record of the
Applicants, on the Monitor's website; and (iii) of the right of the counterparties to suc,'~
Additional Assigned Contracts lo object to the assignment to the Purchaser thereof. On AUg-:.~s;
13, 2012, and August 14, 2012, a Notice Letter was sent to two (2) additional counterpa ':: added to the Listed Closing Assigned Contracts subsequent to the August 10, 2012 distribution of the Notice Letter.
31. Following the sending of the Assignment Notice and the Supplemental Notice.;, as well as the Notice Letter, there were discussions between or among certain
contra,'ounterparties, the CCAA Parties, their respective counsel and the Monitor relating to tie assignment of contracts, the proposed cure amounts and possible consents to assignment. described above, none of the objections filed with the U.S..Court remain outstanding in re".,;:ec'. of the Listed Closing Assigned Contracts; however, to date, counterparty consents to assignmeni of the Listed Closing Assigned Contracts have not been received and it is not practically possible for CII to obtain consensual assignment agreements relating to each of the Listed Closing
Assigned Contracts prior to the expected timing of Closing.
32. The Applicants are bringing the within motion to assign the Listed Closing
Assigned Contracts (as they may be updated prior to the date of the Assignment Order or supplemented by Additional Closing Assigned Contracts after the date of the Assignment Order -14-
and prior to Closing) and any Additional Assigned Contracts designated by the Purchaser for assignment and assumption after Closing to the Purchaser and/or a Purchaser Nominee, notwithstanding any restriction or prohibition contained in any such contract relating to the assignment thereof, including any provision requiring the consent of the counterparty to such assignment, given: (i) the conditions to Closing relating to the assignment of contracts; (ii) the timelines for the Closing of the Asset Sale Transaction under the Asset Purchase Agreement; (iii) the Purchaser's ability under the Asset Purchase Agreement to designate Additional Contracts for assignment up to and following the Closing; and (iv) the extensive notice provided to contract counterparties, and to ensure completion of the Asset Sale Transaction and assist with the successful reorganization of the CCAA Parties as a going concern.
33. I understand the Appl'icants are bringing the within motion with respect to CII only given the Sale Recognition Order and specific procedures thereunder and under the U.S.
Bankruptcy Code provide a comprehensive process for assignment of contracts as related to the
Asset Sellers that are U.S. Debtors. Although CII is also a U.S. Debtor subject to the Chapter 15
Proceedings, the Applicants are seeking the proposed Assignment Order with respect to it as CII is a Canadian entity and because it is required by the Asset Purchase Agreement, I also understand there is potential overlap between the relief requested in the proposed Assignment
Order regarding the assignment of Contracts to which CII is a party and the Sale Recognition
Order providing for, among other things, the assumption and assignment of certain executory contracts and unexpired leases. As a result of the foregoing, the proposed Assignment Order provides: (a) that any assignment or transfer of leases, contracts or agreements by the Asset
Sellers is subject to the Sale Recognition Order; and (b) to the extent of any inconsistency between the Assignment Order and the Sale Recognition Order, the Assignment Order shall -15-
govern, provided that no inconsistency results if assumption and/or assignment of a lease, contract or agreement forms part of the Sale Recognition Order but does not form part of the
Assignment Order (or vice versa).
D. The Purchaser's Ability to Perform the Obligations under the Assigned
Contracts
As described in my affidavit sworn June 23, 2012 in support of the Initial Order (a copy of which is attached hereto as Exhibit "L", without exhibits) (the "Initial Order
Affidavit" ) and the affidavit of Mark Hootnick sworn June 23, 2012 in support of the Appro;-.i and Vesting Order (a copy of which is attached hereto as Exhibit "M", without exhibits) (the
"Sale Approval Affidavit" ), the Asset Purchase Agreement is the result of an extensive strategic review process. The Purchaser has satisfied certain conditions precedent, including the delivery of a USD$ 5 million deposit, demonstrating the Purchaser's commitment to consummate the Sale
Transaction and its financial capabilities.
35. As described in the Initial Order Affidavit, the Purchaser is an entity owne '. 'v',
Najafi Companies ("Najafi"), an international private investment firm based in Phoenix.
Arizona. I understand any Purchaser Nominee will also be an entity owned by Najafi. Iri connection with the motion for the Sale Recognition Order, in July 2012, Najafi prepared a presentation in connection with the Sale Transaction (the "Najafi Presentation", a copy of which is attached hereto as Exhibit "N") to be provided to Contract counterparties who requested assurance of future performance by the Purchaser or Purchaser Nominee under the Contracts to be assigned to the Purchaser or a Purchaser Nominee.
36. The Najafi Presentation explains that Najafi is a diversified private investment firm which invests internally generated capital and is experienced at evaluating and acquiring -16- —23
businesses in unique situations. The Najafi Presentation also describes a number of recent
successful transactions and company transformations completed by Najafi.
37. As referenced on the firm's website, Najafi makes selective investments up to
US$ 1 billion in transaction value in companies across a variety of industries, taking a long-term
view on its investments and focusing its efforts on creating value through growth and superior
performance. The Najafi Presentation also describes Najafi's investment philosophy as a long-
term investment philosophy pursuant to which Najafi works to stabilize and grow its
investments.
38. The Najafi Presentation provides an overview of Cinram's projected financial
outlook assuming the Asset Sale Transaction is completed, which overview suggests an
improved financial position for Cinram after the elimination of existing long-term debt and
related interest payments.
39. Najafi's investment philosophy, history of recent successful transactions and the
projected financial outlook of the Cinram business to be acquired by the Purchaser, each as
described in the Najafi Presentation, indicate that the Purchaser and/or a Purchaser Nominee
would be in a position to perform its obligations under any Contracts assigned to it in accordance
with the terms of the Asset Purchase Agreement.
K. The Assignment of the Listed Closing Assigned Contracts and any
Additional Assigned Contracts is Critical for the Successful Completion of
the Sale Transaction
40. The CCAA Parties have been advised that the Purchaser intends to carry out
substantially the same business as Cinram and to do that, it requires an assignment of
substantially all of the contracts, agreements and leases used by Cinram in its business. As - 17-
discussed above, the assignment of the Listed Closing Assigned Contracts and Addition.=;;
Closing Assigned Contracts is a condition precedent to the Closing of the Asset Sale Transaction
and the Purchaser has the ability under the Asset Purchase Agreement to designate Open
Contracts and Olyphant Contracts for assignment following Closing. Accordingly, the Listed
Closing Assigned Contracts and any Additional Assigned Contracts are an integral componen- .l the Sale Transaction and the Purchaser's ability to continue Cinram's current operations.
41. As explained in the Initial Order Affidavit and the Sale Approval Affidavit„'.he
Sale Transaction will allow Cinram to be well positioned to increase its market share in the
industry based on its status as the leading service provider and with an improved and norma['.;::c-.: capital structure. The Sale Traryaction represents the best available alternative in circumstances to Cinram and its stakeholders as a whole and the best opportunity.to nopnaiize i!:. capital structure and preserve the value of the Cinram business.
42. Accordingly, the Applicants are requesting the proposed Assignment Ordc..: . ensure completion of the Sale Transaction in the best interests of the Cinram business an.~
Cinram's stakeholders.
IV. CONCLUSION
43. As discussed in the Initial Order Affidavit, the principal objectives of these
CCAA proceedings include ensuring the ongoing operations of Cinram and completing the sa!e and transfer of substantially all of Cinram's business as a going concern to the Purchaser. This
Honourable Court has approved the Asset Purchase Agreement and the Asset Sale Transaction.
The Purchaser intends to continue operating the business of the CCAA Parties (with the exception of the Excluded Assets (as defined in the Asset Purchase Agreement)) on a going concern basis and all monetary defaults in relation to the Listed Closing Assigned Contracts, any -18- 25
Additional Closing Assigned Contracts and any Additional Assigned Contracts will be remedied
in accordance with the CCAA, as indicated in the Assignment Notice, Supplemental Notices and
Designation Notices, as applicable, provided to counterparties and in accordance with the Asset
Purchase Agreement. I believe the Purchaser is an appropriate counterparty to these Contracts
and I am not aware of any prejudice that will be caused to the counterparties as a result of the
assignment thereof to the Purchaser and/or a Purchaser Nominee,
SWORN before me at the City of~ Toronto, on August 14, 2012.
A Cp(nmissioner for taking affidavits John H. Bell
JONATHAN ROSS EOGE. a Commissioner, etc., Province ot Ontario, while a Student-at-t.aw. Expires May 5, 20t4. SCHEDULE "A"
Additional Applicants
Cinram International General Partner Inc.
Cinram International ULC
1362806 Ontario Limited
Cinram (U.S.)Holding's Inc.
Cinram, Inc.
IHC Corporation
Cinram Manufacturing LLC
Cinram Distribution LLC
Cinram Wireless LLC
Cinram Retail Services, LLC
One K Studios, LLC 1
I' This is Exhibit "A"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of August, 2012.
A Commfssioner Sr Taking Affidavits
JONATHAN ROSS EOGE, a rCommlssioner, etc., Province o1Ontario, while a Student-at-law, Expires May 5, 2014, —28
ASSK&T PURCHASE AGRKKNIKNT
CINRAM&INT'KR'NATIONAL INC.
''s fli3
"SeOe&r"''INRAM
ACQUISITION, INC.
As the "Buyer"
Made as of June 22,2012
DMWEST N3961669 v29 ASSK&T I'URCHASK AGRKKMK&NT
THIS ASSET PURCHASE AGRK&K&MKNT is made as of June 22, 2012, BET&KEN;
CINRAM INTK&RNATIONAL INC., a corporation organized under the Canada Business Corporaii ons Act (the "Seller"}
—and—
CINRAM ACQUISITION, INC., a corporation organized under the laws of the State of Delaware (the "Buyer") RECITALS:
A. 'l'hc Seller, directly or through the Additional Sellers (defined below}, (1) manufactures pre-recorded multimedia products and provides related logistics services in North America and Europe, (2) owns and operates a digital media production studio, and (3) offers fully hosted business intelligence and analytics solutions through its Vision proprietaiy software platform (collectively, the "Business" ).
B, The Seller, together with Moelis k Company ("Moclis"), conducted an investment and sale process for the Business.
C, The Seller wishes to sell, and the Buyer wishes to purchase, substantially all of the Seller's and the Additional Sellers'roperty and assets used in connection with the Business carried on by the Seller and the Additional Sellers in North America (collectively, the "Purchased Business"), subIcct to the terms and conditions of this Agreement, and subject to Court Approval (defined below).
D. Concurrently with the execution of this Agreement, the Buyer is making an offer to thc Sellei to acquire the Business in Europe (the "European Business" ) pursuant to the lettei attached to this Agreement as Exhibit A (the "Offer").
E. Thc Buyer expects to nominate one or more Canadian entities to take title to the Canadian Purchased Assets, and one or more United States entities to take title to the United States Purchased Assets, pursuant to the nomination provisions set forth in Section 12.7.
NOW, TIIK&RL&I&ORE, in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of v.hich are acknowledged, the Parties agree as follows:
DMWEST 88961669 v29 —30
ARTICLE 1. —INTERPRETATION
1.1 Definitions
In this Agreement,
"Accounts Payable" means, in respect of an entity, (a) trade payables, royalties, sales allowances, rebates, freight and sales taxes payable by such entity, (b) outstanding balances owing to customers, including accrued rebates and sales allowances, payable by such entity; and (c) the accounts payable of the Asset Sellers listed in Schedule 1.1('a).
"Accounts Receivable" means, in respect of an entity, all trade accounts receivable and all trade debts due or accruing due to such entity in connection with the Purchased Business and the full benefit of all security therefor.
"Acquisition Proposal" nieans, other than the transactions involving the Buyer contemplated by this Agreement any bona frde (a) merger, amalgamation, business combination, take-over bid, tender offer, arrangement, consolidation, recapitalization, reorganization, liquidation, dissolution, winding up, distribution or share exchange involving the Seller and/or one or more of its wholly-owned material subsidiaries thc assets or revenues of which, individually or in the aggregate, constitute 20% or more of the consolidated assets or contributing 20% ol'11ol'e of consolidated revenue, as applicable, of the Seller and its subsidiaries, taken as a whole, or (b) sale of assets of the Seller and/or one or more of its wholly- owned subsidiaries representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of the Seller and its subsidiaries, taken as a'whole (or any lease, long-term supply agreement or other arrangement having the same economic effect),
"Additional Sellers" m'cans the Asset Sellers (other than the Seller),
"Affiliate" of any Person means any Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common. control with, such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
"Agreement" means this Asset Purchase Agreement and all attached Exhibits and Schedules, in each case as the same may be supplemented, amended, restated or replaced from time to time, and the expressions "hereof', "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Agreement and all attached Exhibits and Schedules and unless otherwise indicated, references to Articles, Sections, Exhibits and Schedules are to Articles, Sections,. Exhibits and Schedules in this Agreement.
"Applicable Law" means any domestic or foreign statute, law (including the common law and the law of equity), ordinance, rule, regulation, restriction, by-law (zoning or otherwise), order, or any consent, exemption, approval or licence of or concerning a Governmental Authority, that applies in whole or in part to the transactions contemplated by this Agreement, 2
DMWEST 46961669 v29 the Seller, the Additional Sellers, the Buyer, the Purchased Business or any of the Purchased Assets.
"Approval and Ucsting Order" means an order granted by the Canadian Coutt substantially in the form attached hereto as Exhibit B.
"Asset Sellers" means the Seller, Cinram Inc„Cinram Retail Services LLC, One K Studios LLC, Cinram Distribution LLC and Cinram Manufacturing, LLC.
"Assumed Contracts" has the meaning given to such term in Section 2.1(g).
"Assumed Employee Plan" means any Employee Plan that is set forth on Schedule ~1.1 b .
"Assumed Employees" has the meaning given to such term in Section 8.7(a),
"Assumed Liabilities" has the meaning given to such term in Section 2.3.
"Assumed Uncaptured Accruals" has the meaning given to such term in Section 2.3(I).
"Bankruptcy Code" means Title 11 of the United States Code, as amended fi.om time to t11Tle.
"Banlu uptcy Court" means the United States Bankruptcy Court for, the District of De!aware,
"Board of Trustees" means the board of trustees of Cinram International Income Fund, the beneficial owner of all of the outstanding shares of the Seller,
"Break Fee" has the meaning given that term in Section 8.8(e).
"Business" has the meaning given to such term in Recital A.
"Business Bay" means any day other than a Saturday or Sunday or a statutory holiday in Toronto, Ontario and in New Yorlc, New York..
"Buyer" has the meaning given to such term in the preamble to this Agreement. The Buyer expects to nominate one or more Canadian entities to take title to the Canadian Purchased Assets, and one or more United States entities to take title to the United States Purchased Assets, pursuant to the nomination provisions set forth in Section 12.7. Each of such new entities will be the "Buyer" hereunder if and as the context requires.
"CCAA" means the Companies'reditors Arrangernen/Acr (Canada).
"Canadian Court" means the Ontmio Superior Court (Commercial List).
"CCAA Initial Qrder" means an order granted by the Canadian Court substantially in the, form attached hereto as Exhibit C.
DMWEST 48961669 v29 —32
"CCAA Proceedings" means the proceedings commenced under the CCAA by the Seller pursuant to the CCAA Initial Order.
"CCAA Recognition Order" means an order of the Bankruptcy Court entered in the Chapter 1S Proceedings pursuant to section 1S17of the Bankruptcy Code recognizing the CCAA Proceedings as foreign main proceedings,
"Chapter 15 Debtors" means the Seller, the Additional Sellers and Cinram (U.S.) Holding's Inc.
"Chapter 15 Proceedings" means the proceedings commenced under chapter 15 of the Bankruptcy Code by each of the Chapter 15 Debtors.
"Closing" means the completion of the sale and purchase of the Purchased Assets pursuant to this Agreement at the Closing and all other transactions contemplated by this Agreement that are lo occur contemporaneously with the sale and purchase of the Purchased Assets.
"Closing Date" means July 31, 2012, or such other date agreed to by the Parties in writing, subject to satisfaction of tjie conditions to Closing set forth in Article 7.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Confideiitial Information" means tlie infoimation (whether or not marked or identified as confidential), including but not limited to intellectual property, methodolo'gy, technology and programs, software, source code, product plans, designs, formulae, processes, techniques, drawings, diagrams, visual demonstrations, ideas, concepts, costs, prices and names, data, technical infoiTnation, financial information, business plans, business processes and systems, information relating to clients and prospective clients, agreements and terms thereof, strategies, practices, marketing plans, advertising, commercial or sales materials, business opportunities, personnel, research, development or know-how which has been or may hereafter be disclosed, directly or indirectly, to the Buyer either orally, in writing or in any other form or medium whatsoever pursuant to or in contemplation of this Agreement, Drovided that Confidential Information shall not include information that: (a) is now or subsequently becomes generally available to the public through no fault or breach on the part of the Buyer; (b) is independently developed by the Buyer without the use of any of the Confidential Information, nrovided that such independent development is capable of being proven in a couit of law; (c) is required to be disclosed by court order or other lawful action of a Governmental Authority, but only to the extent so ordered or required, and provided that the Buyer shall notify the Seller, so that the Seller may attempt to obtain a protective order either restricting or preventing such disclosure; or (d) is rightfully received by the Buyer from a third party without a duty of confidentiality to the Seller or its Affiliates, nrovided that such rightful receipt by the Buyer is capable of being proven in a court of law.
"Confidentiality Agreement" means the confidentiality and non-disclosure agreement executed by the Buyer in favour of the Seller dated April 3, 2012.
DMWEST 86961669 v29 "Court Approval" means (a) the issuance of the Approval and Vesting Order by the Canadian Court approving the sale of the Purchased Assets, (b) the entry of a Sale Recognition Order by the Bankruptcy Court, and (c) with respect to both the Approval and Vesting Order and the Sale Recognition Order, all opportunities for rehearing, reargument, petition for certiorari and appeal being exhausted or having expired without any appeal, motion, or petition having been filed and remaining pending, any requests for rehearing have been denied, no order having been entered and remaining pending staying, enjoining, setting aside, annulling, reversing, remanding, or superseding the same, the expiration of any required waiting or appeal period(s) without an appeal having been filed and remaining pending, and all conditions to effectiveness prescribed therein or otherwise by law or order having been satisfied,
"Court Orders" means the CCAA Initial Order, the Approval and Vesting Order, the Provisional Relief Order, the CCAA Recognition Order, and the Sale Recognition Order.
"Data Room" means the virtual data room available at https://goodmansdealroom.firmex.corn/app/login.aspx,
"L&ffective Date" means April 30, 2012.
"L&ffectlve Date Balance Sheet" has the meaning given that term in Section 4.8(d).
"Employee Plan" means any plan, arrangement, agreement or program sponsored, administered or maintained by the Seller, that has any application to the Seller'9 employees (including directors, officers, retired employees, former employees, individuals working on contract with the Seller or other individuals providing services to the Seller of a kind normally provided by employees) or their dependants or beneficiaries and consisting of or relating to, as the case may be, any one or more of the following;
(a) retirement savings or pensions, group registered retiremeiit savings plan, or supplemental pension or retirement plan or retirement compensation arrangement;
(b) any bonus, incentive or retention pay or compensation, deferred compensation, profit sharing or deterred profit sharing, stock option, stock appreciation, stock purchase, phantom stock, vacation or vacation pay, sick pay, severance or termination pay, employee loans or separation from service benefits, or othei'ype of plan or arrangement providing for compensation or benefits additional to base pay or salary; and
(c) any disability or wage continuation benefits during periods of absence fiom work, or any other benefit, including supplemental unemployment, hospitalization, health, medical/dental, disability, life insurance, death or survivor benefits, employment insurance, and fringe benefits.
''Encumbrance" means any security interest, lien, prior claim, charge, hypothec, hypothecation, reservation of ownership, pledge, encumbrance, mortgage or adverse claim of any nature or kind other than licenses of Intellectual Property.
DMWEST %3961669v29 "Environmental Claim" means any claim, action, cause of action, investigation or notice by any Person alleging potential liability (including potential liability for investigatory costs, cleanup costs, Governmental Authority response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (a) the presence, Release or threatened Release of any Hazardous Materials at any location owned or operated by the Seller or any Additional Seller, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmen(al Law,
"Environmental Law" means any Applicable Law relating to pollution or protection of the environment, natural resources or human health and safety (including occupational or workplace health and safety), including laws relating to the exposure to, or Releases or threatened Releases of, Hazardous Materials or otherwise relating to the manufacture, presence, processing, distribution, use, treatment, storage, Release, transport, disposal, transfer, discharge, control, recycling, production, generation or handling of Hazardous Materials and all laws with regard io recordkeeping, notification, disclosure and reporting requirements respecting I-Iazardous Materials, each as amended and as now in effect.
"Environmental Permit" means any permit, licenses, approvals, authorizations franchises, certificates, consents, registrations, certificates of authorization and de-pollution attestation or other authorizations «'equired under any Environinental Law to (a) conduct the Purchased Business as currently conducted, 'or (b) in relation to the Purchased Assets,
"Escrow Agreement" has the meaning given that term in Section 3.1(a),
"European Business" has the meaning given to such term in Recital IX
"European Material Customer" means those customers separately listed in a writing provided by the Seller to the Buyer (which writing references this definition), which Seller represents are the only customers of the European Business who represented 2% or more of sales during 2011, with such exceptions as noted in such separate writing.
"European Purchase Price" has the meaning given to such term in Section 3.1(c).
"European liepresentations" has the meaning given to such term in Section 4,19.
"Excluded Assets" has the meaning given to such term in Section 2.2.
"Excluded Liabilities" has the meaning given to such term in Section 2.4.
"1&iling Date" means the date of the Initial CCAA Order,
''Eoreign Representative" means Cinram International ULC or such other foreign representative as may be appointed by the Bankruptcy Court in the Chapter 15 Proceedings.
"GAAP" or "generally accepted accounting principles", except to the extent otherwise expressly provided herein, means generally accepted accounting principles in Canada from time to )ime approved by the Canadian Institute of Chartered Accountants, or any successor institute, 6
DMWEST N8961669 v29 including International I'inancial Reporting Standards and those recommended in the I-Iandbook of the Canadian Institute of Chartered Accountants on the date on which such generally accepted accounting principles are applied, on the basis that the Purchased Business is regarded as a going concern, other than those principles requiring the recognition of impairment or similar Encumbrances arising out of the CCAA Proceedings and events relating thereto.
"Governmental Authority" means any government, regulatory authority, governmental department, agency, commission, bureau, court, judicial body, arbitral body or other law, rule or regulation-malcing entity:
(a) having jurisdiction over any Asset Seller, the Buyer, the Purchased Assets or the Assumed Liabilities on behalf of any country, province, state, locality or other geographical or political subdivision thereof; or
(b) exercising or entitled to exercise any administrative, judicial, legislative, regulatory or Taxing authority or power.
"Governmental Authorizations" means authorizations, approvals, franchises, orders, certificates, consents, directives, notices, licenses, permits, variances, registrations or other rights issued to or required by any Asset Seller. relating to the Purchased Business or any of the Purchased Assets by or fiom any Governmental Authority.
"GST"means goods and services taxes imposed under the GST Legislation which, for greater ceitainty, includes the provincial component of any harmonized sales'tax imposed under the GST Legislation.
"GST Legislation" means Part IX of the Excise Tax Ac( (Canada),
"Hazardous M'iterials" means any substance, including a solid, liquid, gas, odour, heat, sound, vibration, radiation or combination of any of them, which is deemed to be, alone or in any combination, "hazardous," "hazardous waste," "radioactive," "deleterious," "toxic," "caustic," "dangerous," a "contaminant," a "pollutant," a "dangerous good," a "waste," a "special waste," a "source of contamination" or a "source of a pollutant" under any Environmental Law whether or not such substance is defined as hazardous under the Environmental Law involved; any substances or materials the presence or concentration of which in soil, sediment, ground water or surface water is regulated under any Environmental Law, including, without limitation, asbestos, asbestos-containing materials, lead or lead-based paint, polychlorinated biphenyls, mould, mildew or fungi, oil, waste oil, petroleum, petroleum productions, or urea formaldehyde foam insulation; and any other material or substance which may pose a threat io the environment or to human health or safety.
"Huntsville Facility" means the real property and related facility subject to the IDB Lease.
"Huntsville Facility Purchase Price" has the meaning given to such term in Section 4.15(d).
DMWEST t6961669 v29 —36
"ICA" means the 1nvestment Canada Act (Canada), as amended.
"ICA Financial Statements" has the meaning given such term in Section 4.17(b).
"IDB"has the meaning given such term in Section 4.15(a).
"IDBLease" has the meaning given such term in Section 4.15(a).
"including" and "includes" shall be interpreted on an inclusive basis and shall be deemed to be followed by the words "without limitation".
"Initial Designation Date" has the meaning given such term in Section 9.2(b).
"Intellectual Property" means trademarks and trademark applications, trade names, certification marks, patents and-patent applications, copyrights, know-how, formulae, processes, inventions, technical expertise, research data, trade secrets, industrial designs and other similar property, and all registrations and applications for registration thereof.
"Inventories" means, in respect of an entity, all inventories of finished goods (other than finished goods, including replicated disks, that belong to customers), work in process, raw materials and other materials and Supplies, including packaging and similar materials.
"KERP" means the key employee retention plan adopted by Cinram in October, 2011, including the letter agreements with the Seller's two senior executives dated January 17, 2012.
"Letters of Credit" means the letters of credit listed in Schedule 1.1(c).
"Madison Purchase Right" has the meaning given to such term in Section 4.15(e).
"Material Adverse Effect" means a change in or an effect on the Purchased Business and the European Business (taken as a whole), or circumstance, that materially and adversely impacts the value of the Purchased Business and the European Business (taken as a whole) as at the date of this Agreement, but shall exclude: (a) the commencement of the CCAA Proceedings and the Chapter 15 Proceedings or any changes or effects resulting from the announcement or pendency of the CCAA Proceedings or the Chapter 15 Proceedings; (b) changes, effects or circumstances that generally, or in the regions in which the Purchased Business or the European Business operate, affect the industries in which the Purchased Business or the European Business operate (including legal and regulatory changes); (c) any change or prospective change in Applicable Law or GAAP, or any interpretation of any of the foregoing; (d) general economic or political conditions or changes, effects or circumstances affecting the financial or securities markets generally; (e) changes, effects or circumstances relating to foreign currency exchange rate fluctuations; (f) changes arising from the consummation of the transactions contemplated in this Agreement, or the announcement of the execution of this Agreement, including (i) any actions of competitors, (ii) any actions taken by or losses of employees, or (iii) any delays or cancellations of orders for products or services; (g) any reduction in the price of services or products offered by the Purchased Business or the European Business in response to the reduction in price of comparable services or products offered by a competitor; (h) changes
8
DMWEST ¹6961669v29 caused by acts of terrorism or war (whether or not declared); and (i) any change, effect or circumstance that results from any action taken pursuant to or in accordance with this Agreement or at the request of the Buyer.
"Material Contracts" means: (a) except pursuant to purchase orders issued in the ordinary course of business, any contract for the purchase of materials, supplies, goods, services, equipment or other assets that provides for aggregate payments by or to any Asset Seller of $250,000 or more; (b) the customer contracts whose. aggregate annual revenues to the Purchased Business constituted at least 90% of the consolidated annual revenues of the Purchased Business during 2011; (c) a contract which by its terms cannot be terminated by an Asset Seller for a period in excess of 12 months without a payment or a penalty; (d) an employment or consulting contract requiring an Asset Seller to pay annual compensation of $ 125,000 or more; (e) a contract restricting in any manoer an Asset Seller's right to compete in any material line of business with any other Person; (f) a contract regarding indemnification, other than those contracts that contain customary indemnification clauses as pait of the overall agreement; and (g) a contract wherein an Asset Seller granted to another Person exclusive rights, all of which have been separately listed in a writing provided by the Seller to the Buyer (which writing references (his definition).
"Material Customers" means those customers separately listed in a writing provided by the Seller to the Buyer (which writing references this definition), which Seller represents are the only customers of the 1'urchased Business who represented 2% or more of sales during 2011, with such exceptions as noted in such separate writing,
"Moells" has the meaning given to such term in Recital B.
"Monetary Defaults" means monetary defaults under each of the Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans that the Buyer has designated for assumption and assignment, excluding (a) amounts accrued on the Effective Date Balance Sheet, (b) Assumed Uncaptured Accruals, and (c) amounts that arose after April 30, 2012 in the ordinary course of business,
"Monitor" means the monitor appointed by the Canadian Court under the CCAA Initial Order in respect of. the CCAA Proceedings'.
"Objecting Counterparty" has the meaning given such term in Section 9.2(g).
"Offer" has the meaning given to such term in Recital D.
"Olyphant Contract" has the meaning given to such term in Section 9.2(i).
"Olyphant I& acility" means that ceitain manufacturing facility owned by Cinram Manufacturing LLC located at 1400 E, Lackawanna Ave., Olyphant, Pennsylvania.
"Open Contract" has the meaning given such term in Section 9.2(d).
"Option" has the meaning given such term in Section 4.15(a).
DMWEST &961669v29 .3S
"Order" means any order, injunction, treaty, resolution, edict, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Authority.
"OSC"has the meaning given that term in Section 4.7(a}.
"Owned Real Property" means the Real Property that is not an Excluded Asset and all plants, buildings, structiires, improvements, appurtenances and fixtures (inc)uding fixed machinery and fixed equipment) thereon, forming part thereof or benefiting such real or immoveable property.
"Parent" has the meaning given that term in Section 4.7(a).
"Parent Financial Statements" has the meamng given that term in Section 4.7(b).
"Parent Reports" has the meaning given that term in Section 4.7(a),
"Partial Assignment" has the meaning given that term in Section 4,15(d).
"Parties" means the Seller and the Buyer collectively, and "Party" means either the Seller or the Buyer.
"Permits" has the meaning given to such term in Section 2.1(h).
"Permitted Encumbrances" means:
(c) Encumbrances listed or described on Schedule 1.1(d};
(d) Encumbrances given by the Seller as security to a public utility or any Governmental Authority when required in the ordinary course of the Purchased Business but only insofar as they relate to any obligations or amounts not due as at the Closing Date;
(e) reservations, limitations, provisos and conditions, if any, expressed in any original grants of land by a Governmental Authority and any statutory limitations, exceptions, reservations and qualifications on real property;
(f) statutory liens for current Taxes, assessments or other governmental charges not yet due and payable or those being contested in good faith;
(g) discrepancies in the legal description of the Real Property or any adjoining real or immovable property which would be disclosed in an up-to-date survey which do not materially adversely affect the use or value of the Real Property affected thereby (based on the current use of such affected property}, and any registered servitudes, easements, restrictions or covenants that run with the Real Property, as set forth in a title commitment reasonably acceptable to the Buyer;
(h) rights of way for or reservations or rights of others for, sewers, water lines, gas lines, electric lines, telegraph and telephone lines, and other similar utilities, or zoning by-laws, ordinances or other restrictions as to the use of real or immovable property, which do not in the 10
DMWEST ¹8961669v29 aggregate materially detract from the value of any affected property of the Seller (based on the current use of such affected property) or materially impair the use of any property used in the Pu1 chased Business (based on the current use of such affect property) and provided the same are complied with in all material respects up to the Closing Date, as set forth in a title commitment reasonably acceptable to the Buyer;
(i) applicable municipal by-laws, development agreements, subdivision agreements, site plan agreements, servicing agreements, cost sharing reciprocal agreements and building restrictions and other similar agreements which do not materially impair the use of the Real Property affected thereby (based on the current use of such affect property) and provided the same are complied with in all material respects to the Closing Date including the posting of any required security for performance of obligations thereunder;
(I) all encroachment agreements, restrictive covenants, survey exceptions, reciprocal easement agreements and other Encumbrances registered against title to any Real Property which do not materially impair the use of such property provided same are complied with in all material respects, as set foith in a title commitment reasonably acceptable to the Buyer;
{Ic) defects or irregularities in title to the Real Property which are of a minor nature and do not in the aggregate materially impair the use of the Real Property affected thereby (based on the current use of such affect property), as set foith in a title commitment reasonably acceptable to the Buyer;
(I) Encumbrances of mechanics, laboiuers, worlonen, builders, contractors, suppliers of material or architects or other similar encumbrances incidental to construction, maintenance or repair. operations which have either been registered or filed pursuant to Applicable Law against the Seller or not yet registered or filed and which, in any such case, relate to obligations not due and payable or which are being contested in good faith by appropriate proceedings diligently co nclucted;
{m) statutory Enciuribrances relating to obligations not due and payable;
{n) Encumbrances associated with, and financing statements evidencing, the rights of equipment lessors under equipinent Contracts or Personal Property Leases;
(o) Encumbrances associated with the Real Propeity Leases or the real or immovable properties subject to the Real Property Leases including all offers to lease and monthly tenancies and all other agreements in any way relating to the occupation of any such properly and any notice thereof; and
(p) the Assumed Liabilities.
"Person" means any individual, partnership, limited partnership, limited liability company, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, Governmental Authority or other entity however designated or constituted.
DMWEST 08961669 v29 —4Q
"Personal Property Leases" has the meaning given to such term in Section 2.1(n).
"Prepaid Expenses" means, in respect of an entity, the full benefit of all prepaid expenses, other than Tax prepayments and insurance prepayments, of such entity.
"Provisional Relief Order" means an order of the Banlowptcy Court entered in the Chapter 15 Proceedings pursuant to section 1519of the Bankruptcy Code granting provisional relief to the Chapter. 15 Debtors.
"Purchase Price" has the meaning given to such term in Section 3,1,
"Purchased Accounts Rcccivablc" has the meaning given that term in Section 4.8(a).
"Purchased Assets" has the meaning given to such term in Section 2.1.
"Purchased Business" has the meaning given to such term in Recital C.
"Real Property" has the meaning given to such term in Section 2.1(o).
"Real Property Leases" has the meaning given to such term in Section 2.1(a),
"Real Property Taxes" means Taxes imposed with respect to the Owned Real Propeity for the tax year that includes the Closing Date which are paid or accrued by the Asset Sellers in the ordinary course of business,
"Reduced Purchase Price" has the meaning given to such term in Section 4.15(d).
"Regulatory Approvals" means approvals required under the ICA, and all other such consents, approvals, permits and authorizations with any other Governmental Authorities whose consent is required for consummation of the transactions contemplated by this Agreement.
"Rejection Notice" has the meaning given such term in Section 9.2(d).
"Release" means any release, spill, emission, discharge, leaking, pouring, emptying, escaping, dumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property.
"Released Party" has the meaning given to such term in Section 8.10.
"Sale Recognition Order" means an order of the Bankruptcy Court, substantially in the form attached hereto as Exhibit D, in form and substance reasonably acceptable to the Buyer and its counsel.
"Seller" has the meaning given to such term in the preamble to this Agreement,
"Seller E&xpenses" means all liabilities of the Seller incurred and relating to (a) the period after the Effective Date in connection with the Seller's strategic process and the transactions 12
DMWEST ¹8961669v29 contemplated hereby to the professional advisors of the Seller and the Seller's lenders, including legal counsel, accountants, tax advisors, financial advisors and other advisors to the Seller and its lenders, and (b) any premiums for the tail directors and officers'nsurance paid by the Seller as permitted by Section 8.2, but excluding obligations under the KERP and any excise taxes exigible on such Seller Expenses.
"Seller's Representations" has the meaning given that term in Section 12.4,
"Sunset Date" has the meaning given to such term in Section 10.1(b)(i).
"Superior Proposal" means any written Acquisition Proposal made after the date of this Agreement that:
(a) is, in the opinion of the Board of Trustees, acting in good faith after receiving the advice of its outside legal counsel and financial advisors, reasonably likely to be consummated ai the time and on the terms proposed, taking into account, to the extent considered appropriate by the Board of Trustees, all financial, legal, regulatory and other aspects of such Acquisition Proposal;
(b) in respect of which &he funds or other consideration necessary to complete the Acquisition Proposal have been demonstrated to be available to the reasonable satisfaction, of the Board of Trustees;,
(c) did not result fiom a breach of Section 8.8; and
(d) in respect of which the Board of Trustees determines, in its good faith judgment, after receiving the advice of its outside legal counsel and financial advisors that, having regard to all of its terms and conditions, such Acquisition Proposal would, if consummated in accordance with terms (but not assuming away any risk of non-completion), result in a transaction more favourable to the Seller from a financial point of view than the transactions contemplated hereby,
"Tax" and "Taxes" means:
(a) taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any kind whatsoever imposed by any Governmental Authority, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Authority in respect thereof, and including those levied on, or measured by, or referred to as, income, gross receipts, profits, capital, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, propeity, development, occupancy, employer health, payroll, employment, health, disability, severance, unemployment, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping, all licence, fianchise and registration fees and all employment insurance, health insurance and Canada, Ontario and other government pension plan premiums or contributions; and
(b) any liability in respect of any items described in clause (a) payable by reason of co@tract, assumption, transferee liability, operation of law, United States Income Tax Regulation 13
OMWEST «896166S V29 —42
Section 1.1502-6(a) (or any predecessor or successor thereof or any analogdus or similar provision under law) or otherwise;
"Title Company" has the meaning given to such term in Section 11.1.
"Title Commitment" means a preliminary title conmiitment in respect of each parcel comprising the Owned Real Propert and the Huntsville Facility.
"Title Insurance Policy" has the meaning given to such term in Section 8.11(b).
"Transfer Taxes" has the meaning given to such term in Section 8.6(c),
"Transferred Intellectual Property" has the meaning given to such term in Section 4.9(a).
"Transition Services Agreement" has the meaning given such term in Section 2.6,
"Uncaptured Accruals" means liabilities or contingent liabilities of the Purchased Business that arose on or prior to, and that have not been paid in full as of, the Effective Date in the ordinary course of business (other than liabilities or contingent liabilities that are, or relate to, Excluded Assets or Excluded Liabilities), but that are not set forth on the Effective Date Balance Sheet, the amount of which shall be agreed upon by the parties or determined by courts through the CCAA Proceedings and/or the Chapter 15 Proceedings.
"Unpermitted E&ncumbrance" means any defect in the title of any of,the Owned Real Property or the Huntsville Facility or any other matter unacceptable to the Buyer with respect to the Owned Real Property or the Huntsville Facility that does not constitute a Permitted Encumbrance and that has a Material Adverse Effect on the Buyer's ability to operate the Business in its cunent manner from the Owned Real Property or the Huntsville Facility.
1.2 Exhibits and Schedules
The following Exhibits and Schedules form part of this Agreement:
Exhibit A Offer for European Business
Exhibit B Approval and Vesting Order Exhibit C CCAA Initial Order Exhibit D Sale Recognition Order Exhibit E Transition Services Agreement Matters Exhibit F Escrow Agreement Exhibit G Effective Date Balance Sheet
Exhibit I-I ICA Financial Statements
DMWEST ¹6961669v29 Exhibit I Representations Concerning Business in Europe
Schedule 1.1(a) Accounts Payable Schedule 1.1(b) Assumed Employee Plans Schedule 1.1(c) Letters of Credit Schedule 1.1(f) Permitted Encumbrances Schedule 2.1(a) Real Property Leases Schedule 2.1(b) Equipment Schedule 2,1(E) Permits Schedule 2.1(i) Intellectual Property Schedule 2,1(j) Domain Names and Internet Addresses Schedule 2.1(n) „ Personal Property Leases Schedule 2.1(o) Real Property Schedule 2.2(p) Specifically Excluded Assets Schedule 4,3 Consents
Schedule 4.5 Schedule 4,6 Contracts
Schedule 4.9 Transferred Intellectual Property 1.3 Statutes
Unless specified otherwise, reference in this Agreement to a statute refers to that statute as it may be amended, or to any restated or successor legislation of comparable effect.
1.4 Ileadings and Table of Contents
The inclusion ofheadings and a table of contents in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof,
1.5 Gender and Number
In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders,
15
OMWEST ¹6961669v29 44
1.6 Currency
Except where otherwise expressly provided, aH amounts in this Agreement are stated and shall be paid in United States dollars (US$).
1,7 knowledge
Where any representation or warranty contained in this Agreement is qualified by reference to the knowledge of the Seller it will be deemed to refer (o the actual knowledge after due inquiry of Steve Brown, John Bell, Neil Ballantine, Howard Herman and David Ashton, without personal liability on the part of any of them.
1.8 Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof.
1,9 Entire Agreement
Tl~s Agreement and the agreements and other documents required to be delivered pursuant to this Agreement constitute the entire agreement between the Parties, provided that the Confidentiality Agreement shall remain in full force and effect, and set out all the covenants, pro111ises, warranties, representations, conditions and agreements between the Parties in connection with the subject matter of this Agreement and supersede all prio'i"agreements, understandings, negotiations and discussions, whether oral or written, pre-contractual or otherwise. There are no covenants, promises, warranties, representations, conditions, understandings or other agreements, whether oral or written, pre-contractual or otherwise, express, implied or collateral between the Parties in connection with the subject matter of this Agreement except as specifically set foi&h in this Agreement and any document required to be delivered pursuant to this Agreement.
1.-10 Waiver, Amendment
Except as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding unless executed in writing by all Paries hereto. No waiver of'any provision of'this Agreement shaH constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.
1.11 Governing I aw;.Jurisdiction and Venue
This Agreement, the rights and obligations of the Fairies under this Agreement, and any claim or controversy directly or indirectly based upon or arising out of this Agreement or the transactions contemplated by this Agreement (whether based on contract, tort, or any other theory), including all matters of construction, validity and performance, shall in aH respects be governed by, and interpreted, construed and determined in accordance with, the laws of the 16
OMWEST ¹8961669V29 Province of Ontario and the federal laws of Canada applicable therein, without regard to the conflicts of law principles thereof. The Parties consent to the jurisdiction and venue of the courts of Ontario for the resolution of any such disputes arising under this Agreement. Each Paly agrees that service of process on such Party as provided in Section 12.8 shall be deemed effective service of process on such Party,
Notwithstanding the foregoing, any and all documents or orders that may be filed, made or entered in the CCAA Proceedings or Chapter 15 Proceedings, and the rights and obligations of the Paries thereunder, including all matters of construction, validity and performance thereunder, shall in all respects be governed by, and interpreted, construed and deteiTnined in accordance with the CCAA or the Banl&ruptcy Code, as applicable, without regard to the conflicts of law principles thereof. The Parties consent to the jurisdiction and venue of the Canadian Couit or the Bankruptcy Couit, as applicable, for the resolution of any such disputes, regardless of whether such disputes arose under this Agreement, Each Party agrees that sei~ice of process on such Party as provided in Section 12.8 shall be deemed effective service of process on such Party.
ARTICLE 2. —PURCHASE AND SALK
2.1 Agreement to Purchase and Selll Purchased Assets
Upon and subject to the terms and conditions of this Agreement, and subject to receipt of the Couit Approval, at the Closing the Seller shall sell (and shall cause the a&her Asset Sellers to sell) and the Buyer shall purchase, free and clear of all Encumbrances other than Permitted Encumbrances, the Seller's and the other Asset Sellers'espective right, title and interest in and to the following assets, propehy and undertaking, owned or used or held by them for use in, or relating to, the Purchased Business (collectively, the "Purchiised Assets"):
(a) the leases of the premises listed and described in Schedule 2.1(a), all benefits, rights and options pursuant to such leases and all leasehold improvements forming pait thereof (collectively, the "Real Property Leases") and all subleases of real property held by any Asset Seller as landlord, in each case subject to the designation rights granted to the Buyer in Section 9.2;
(b) all machinery, equipment (including all trucks, cars and other motor vehicles), paris, tools, office equipment, computers, servers, furniture, network equipment, electronic and optical equipment, racks, routers, generators, cables, furnishings and accessories whether located on the premises of'any Asset Seller or elsewhere, including the assets summarized in Schedule 2.1(b), together with any additions thereto arising in the ordinary course of the Purchased Business from the date of this Agreement to the Closing Date;
(c) the Asset Sellers'ccounts Receivable;
(d) the Asset Sellers'nventories;
(e) the Asset Sellers'repaid Expenses;
17
DMWEST S8961669 v29 —46
{f) all unbilled revenues of each Asset Seller relating to the Purchased Business;
(g) all IVlaterial Contracts and all other contracts, agreements, leases, commercial indemnities, third party licenses and other legally binding instruments relating to the Purchased Business or the Purchased Assets to which an Asset Seller is a party or by which an Asset Seller is bound, subject in each case to the designation rights granted to the Buyer in Section 9,2 {the "Assumed Contracts" );
(h) the permits, licences, approvals, authorizations and franchises which any Asset Seller holds for the Purchased Business and which are required by each Asset Seller to own the applicable Purchased Assets or to carry on the Purchased Business as set out in Schedule 2.1(h') (the "Permits" );
(i) the Intellectual Property used in the Purchased Business listed in Schedule 2.1(i');
(j) all domain names and internet addresses listed in Schedule 2.1(j);
(k) all assets, agreements and policies forming pate of any Assumed Employee Plan, subject in each case to the designatiori rights granted to the Buyer in Section 9.2;
{I) the goodwill of the"Purchased Business together with the exclusive right to represent the Buyer as carrying on the Purchased Business as successor to the Seller;
(m) subject to Section 2.2(b), all business and financial records and files of the Purchased Business, including all customer lists and lists of suppliers, all operating manuals and specifications, but excluding Tax records and books and records pertaining thereto and all books and records of the Asset Sellers not pertaining to the Purchased Assets or the Purchased Business; provided, however, that the Asset Sellers may retain copies of (i) any records included in the Purchased Assets and (ii) all personnel files, to the extent necessary or useful for the administration any proceedings under the CCAA or any other proceeding to which it is or becomes a party, the filing of any Tax return or compliance with any Applicable Law;
(n) all leas'es of personal or moveable property that relate to the Purchased Business listed on Schedule 2.1(n), including a)l benefits, rights and options pursuant to such leases and all leasehold improvements forming part thereof, subject in each case to the designation rights granted to the Buyer in Section 9.2 (the "Personal Property Leases");
(o) the real or immoveable property owned by the Asset Sellers and used in the Purchased Business listed on Schedule 2.1(o'i, and all plants, buildings, structures, improvements, appurtenances and fixtiues {including fixed machinery and fixed equipment) thereon, forming part thereof or benefiting such real or immoveable property (the "Real 1'roperty'*);
(p) all software and documentation therefor used in the Purchased Business, including, all electronic data processing systems, program specifications, source codes, object code, input data, repoit layouts, formats, algorithms, record file layouts, diagrams, functional
DMWEST «8961669 v29 specifications, narrative descriptions, flow charts, operating manuals, training manuals and other related material;
(q) all telephone, telex and telephone facsimile numbers and other directory listings and e-mail and website addresses used in connection with the Purchased Business;
(r) all refundable Taxes previously paid by the Seller (including any Taxes paid under the GST Legislation) and any claim or iight of the Seller to any refund of Taxes for periods ending on or prior to the Closing Date or which include the Closing Date; and
(s) cash on hand or on deposit with banks or other depositories, other cash equivalents, ceitificatcs of deposit, money markets instruments, bank balances nnd rights in and to bank accounts, excluding (for clarity) the Excluded Assets,
Contemporaneously with the sale of the other Purchased Assets, the Seller shall transfer control of replicated disk inventories relating to the Assumed Contracts.
2.2 Excluded Assets
Notwithstanding any prodsion of this Agreement to the contrary, the Purchased Assets shall not include any of the following assets of the Seller or the Additional Sellers (collectively, the "Excluded Assets" ):
(a) debts due or accruing to any Asset Seller from any shareholder;. director, officer, employee or Affiliate of the Seller;
(b) the general ledger, accounting and Tax records, minute books, corporate seal, taxpayer and other identification numbers and other documents relating to the organization, maintenance and existence of any Asset Seller as a Person;
(c) the Seller's rights under this Agreement or the transactions contemplated hereby;
(d) any deferred Tax assets of any Asset Seller reflecting either the differences between the treatment of items for accounting and income Tax purposes or carryforwards, except tn the extent set forth on the Effective Date Balance Sheet, nnd the amount of any refunds of Taxes paid in respect of income, gross receipts or profits of the Asset Sellers received nfter the Effective Date and relating to the 2012 or prior taxation years;
(e) all contracts of insurance, insurance policies (including DkO policies), insurance plans, insurance refunds, the interest of any Asset Seller in any insurance policies, including any cash surrender value thereof, all assets of the foregoing and all rights and claims under or in respect of the foregoing;
(f) all contracts that are not Assumed Contracts, Real Property Leases-or Personal Propeity Leases or otherwise specifically set foith in Section 2.1, including any contracts that are not designated by the Buyer pursuant to Section 9.2;
19
DMWEST 88961669 v29 (g) all Tax records and books and records pertaining thereto and all books and records of the Asset Sellers not included in Section 2,1(m);
(h) the assets or business of IHC Corporation and Cinram Wireless LLC;
(i) the Purchase Price;
(j) all assets and propeities of the Asset Sellers that are not Purchased Assets;
{k) the shares of capital stoclc or other equity interest in Cinram (U.S,) Holding's Inc., Synbar Equities Inc., Cinram International (Hungary) PrLtd, Cooperatie Cinram Netherlands UA and 1362806 Ontario Limited, any intercompany receivables or payables, or any intercompany investments;
(1) subject to Section 8.16,the cash collateral securing Letters of Credit;
(m) all real propeity interests of Cinram Manufacturing LLC in the Olyphant Facility;
(n) retainers held by the Seller's advisors for post-Closing matters;
{o) the amount of cash advanced by Cinram Wireless LLC or Cinram International (Hungary) PrLtd to any Asset Seller since the Effective Date, any debt owing by Cinram International (Hungary) PrLtd to any Asset Seller and the amount of cash equal to any repayment of any debt owing by Cinram International (Ilungary) PrLtd to any Asset Seller since the Effective Date; and
(p) those assets of the Asset Sellers set foith on Schedule 2.2~3.
2.3 Assumption of Liabilities
The Buyer shall assume as of the Closing Date and shall pay, discharge and perform, as the case may be, fiom and after the Closing Date, the following liabilities and obligations with respect to the Purchased Business and/or the Purchased Assets to the extent not paid or performed by the Asset Sellers prior to Closing (collectively, the "Assumed Liabilities" ):
{a) liabilities of the Asset Sellers for the following items as of the Effective Date:
(i) trade accounts payable;
(ii) royalties;
(iii) sales allowances;
(iv) accrued freight;
(v) accrued wages;
(vi) accrued payroll taxes; 20
DMWEST S6961669v29 (vii) accrued vacation;
(viii) accrued medical benefits;
(ix) accrued worlcers compensation;
(x) accrued temporary labor;
(xi) accrued returns;
(xii) accrued commissions;
(xiii) accrued office, facilities, and information technology costs; and
(xiv) asset retirement obligations, except for (A) those liabilities that relate to contracts that are not designated by the Buyer pursuant to Section 9,2, and (B) other unsecured obligations at the Filing Date which the parties agree are not to be assumed by the Buyer;
(b) liabilities of the Asset Sellers of the types listed in Sections 2.3(a)(i) through (xv) incurred on and after lvlay 1, 2012 to the Filing Date, if incurred in the ordinary course of business, except for (i) those liabilities that relate to contracts that are not designated by the Buyer pursuant to Section 9,2, and (ii) other unsecured obligations at the Filipg Date which the parties agree are not to be assumed by the Buyer;
(c) all liabilities of the Asset Sellers in connection with the Purchased Business incurred in the ordinary course of business on and after the Filing Date to and including the Closing Date;
(d) all liabilities set forth on the Effective Date Balance Sheet and acciwed between the Effective Date and the Closing Date in the ordinMy course of business under Assumed Contracts, Personal Pioperty Leases, Real Propeity Leases and other contracts designated by the Buyer under Section 9.2, subject to any applicable Purchase Price deductions set forth in Section 32:
(e) all liabilities with respect to the post-Closing operation of the Purchased Business or ownership of the Purchased Assets, including liabilities of the Asset Sellers following the Closing under Assumed Contracts, Personal Property Leases, Real Property and other contracts designated by the Buyer under Section 9.2;
(1) all liabilities with respect to Assumed Employees and Assumed Employee Plans set forth in Section 8.7(b), including KERP obligations payable on or al'ter the Closing Date, but subject to the provisions regarding self insured claims set forth in Section 8.7(c);
(g) Transfer Taxes;
(h) all liabilities in respect of capitalized leases with respect to Purchased Assets; 21
DMWEST ¹8961669v29 —50
(i) Real Property Taxes; and
(j} those Uncaptured Accruals with respect to which the Seller has agreed there will be a reduction of the Purchase Price on a dollar-for-dollar basis (any such Uncaptured Accruals, "Assumed Uncaptured Accruals").
2.4 Excluded Liabilities
The following debts, obligations and liabilities of the Seller and/or the Additional Sellers shall be and remain the sole responsibility of the Seller and/or the Additional Sellers, as applicable, and the Buyer shall not assume, accept or undeitake the following debts, obligations, or liabilities of the Seller and/or the Additional Sellers (collectively, the "Excluded Liabilities" ):
(a) all liabilities and obligations relating to the Excluded Assets;
(b) all Seller Expenses;
(c) all liabilities and obligations with respect to employees who are not Assumed Employees and that arise under or relate to Employee Plans that are not Assumed Employee Plans (including any unfunded or underfunded pension liabilities), except as expressly set forth in Section 8.7(c);
(d) all liabilities and obligations related to Taxes in respect of income, gross receipts or profits of the Asset Sellers; and
(e) other than as expressly set forth herein as an Assumed Liability, any other liability of the Seller or the Additional Sellers whatsoever.
2.5 Assignment of Purchased Assets
Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Purchased Asset or any right thereunder if an attempted assignment, without the consent of a third party, would constitute a breach or in any way adversely affect the rights of the Buyer or the Seller thereunder. If such consent is not obtained or such assignment is not attainable pursuant to the CCAA, the Seller'and the Buyer will cooperate and use their respective commercially reasonable effoits to implement a mutually agreeable arrangement pursuant to which the Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, provided, however. that the Buyer acknowledges and agrees that nothing in this Section 2.5 shall operate to prohibit or diminish in any way the right of the Seller to dissolve, wind up or otherwise cease operations or its corporate existence in any manner or at any time subsequent to the Closing Date as it may determine in its sole discretion, which may be exercised without regard to the impact any such action may have on the Seller's ability to fulfill its obligations under this Section 2.5.
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DMWEST ff6961669 v29 2.6 Transition Services
The parties shall negotiate in good faith and at or prior to the Closing enter into an agreement, with effect as of Closing Date, with respect to the matters set forth on Exhibit E attached hereto (the "Transition Services Agreement" ).
ARTICLE& 3.—PURCHASE PRICK AND RKLATK&D MATTERS
3.1 Purchase Price
The aggregate purchase price for the Purchased Assets and pursuant to the Offer for the European Business shall be $82,500,000, subject to adjustment as provided in Section 3.2 (the "Purchase Price"), and shall be paid as follows:
(a) The sum of $5,000,000 shall be paid in cash by the Buyer upon execution of this Agreement by the Parties as a deposit (the "Deposit"), which Deposit shall be paid to and held by JPMorgan Chase Bank pursuant to an escrow agreement in the form attached hereto as Exhibit P (the "Escrow Agreement" );
(b) The Deposit shall 6e held pursuant to the Escrow Agreement until the Closing and credited toward the Purchase Price at the Closing;
(c) The balance of the Purchase Price for the Purchased Business, after crediting the Deposit pursuant to Section 3.1(b), and subject to the adjustments provided 'in=Section 3.2, less $ 10,000,000, shall be paid in cash at the Closing;
(d) $ 10,000,000 of the Purchase Price shall be paid on the earlier of the closing of. the acquisition of the European Business and December 17, 2012; and
(e) The Purchase Price pursuant to the Offer for the European Business (the "European Purchase Price"), shall be paid as provided in the Offer.
3,2 Purchase Price Adjustments
The Purchase Price for the Purchased Assets shall be decreased, on a dollar-for-dollar basis, to reflect (a) any distribution or other transfer of cash or assets from the Asset Sellers to their owners (but not between or among the Asset Sellers) following the Effective Date, (b) any Seller Expenses paid by the Asset Sellers prior to the Closing Date, (c) all fees and expenses associated with the debtor-in-possession financing described in Section 8.2(c), including commitment, agency and other fees, and interest expense, but excluding (for clarity) principal amounts, (d) any breach remedy costs required to be paid to remedy Monetary Defaults in connection with the Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans, (e) without duplication of any adjustments pursuant to previous clause (d), any Assumed Uncaptured Accruals, and (f) the amount of any Taxes actually paid by an Asset Seller after the Effective Date in respect of income, gross receipts or profits of the Asset Sellers for the calendar years 2012 and prior, and shall be increased on a dollar-for-dollar basis to reflect (a) any shortfall in the amount of cash required to fully repay at Closing any debtor-in- 23
DMWEST «8961669 v29 —52
possession facility entered into in accordance with Section 8.2(c), and (b) airiounts drawn under the Letters of Credit from the date of this Agreement to the Closing Date, At least three (3) Business Days prior to the Closing Date, the Seller shall deliver to the Buyer a worksheet setting forth the Seller's good faith estimate of the adjustments to the Purchase Price for (he Purchased Assets required by this Section 3.2, including supporting documentation. If the worksheet is not acceptable to the Buyer, the Buyer shall promptly submit its comments on the worksheet to the Seller., and together they shall endeavour in good faith to address such comments so as not to delay the Closing. The Purchase Price for the Purchased Assets paid pursuant to Section 3,1(c) shall be adjusted as agreed to by the Seller and the Buyer on the basis of the worksheet and their discussions concerning the worksheet. The Purchase Price pursuant to the Offer for the European Business shall be subject to any adjustments provided for in the Offer. The Purchase Price shall not be adjusted, other than as set forth in this Section 3,2, in respect of amounts required to be paid by the Asset Sellers hereunder.
3,3 Purchase Price Allocation
Within thirty (30) days following the Closing, the Parties shall use their respective con1mercially reasonable efforts to agree on the allocation of the Purchase Price for the Purchased Assets and the value of the Assumed Liabilities among each of the Purchased Assets {the "Allocation Statement" ). Thi6 Allocation Statement shall be prepared in accordance with Section 1060 of the Code and other applicable tax laws, The Buyer and the Seller shall report the purchase and sale of the Purchased Assets in any Tax returns relating to the transactions contemplated in this Agreement in a manner consistent with such allocation. If the Parties cannot agree on the Allocation Statement, each Party shall be permitted to mg&e such allocation and report the purchase and sale of the Purchased Assets in any Tax returns relating to the transactions contemplated in this Agreement in a manner determined in its sole discretion.
ARTICLE 4. —RKPIZKSKNTATIONS ANB %ARIVPJTIKS BV THE SELLER
The Seller represents and warrants to the Buyer as follows, and aclcnowledges that the Buyer is relying upon the following representations and warranties in connection with its purchase of the Purchased Assets:
4.1 Entity Power
The Seller is duly organized under the Canada Business Corporations Act and, subject to Court Approval being obtained, has all necessary corporate power, authority and capacity to enter into this Agreement and the agreements contemplated hereunder and to carry out its obligations hereunder and thereunder, Each Additional Seller is duly organized under the Applicable Laws of the jurisdiction of its organization and has all necessary entity power, authority and capacity to carry out the actions necessary to consummate the transactions contemplated hereunder. Each of the Asset Sellers is qualified to do business and is in good standing in each of the jurisdictions in which the ownership or leasing of its assets or the conduci, of its businesses requires such qualification, except in the case where the failure to so qualify or be licensed would not have a Material Adverse Effect. Each of the Seller and the Additional Sellers has the requisite power and authority to own or lease and to operate and use its assets and
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DMWEST ¹6961669v29 53
properties, including the Purchased Assets, and carry on the Purchased Business as now conducted.
4.2 Due Authorization and Enforceability of Obligations
Subject to Court Approval being obtained, the Seller has all necessary power, authority and capacity to enter into this Agreement and the agreements contemplated hereunder, and to carry out its obligations hereunder and thereunder, and the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary action (corporate or otherwise) of the Seller. Without limiting the generality of the foregoing, the Seller has the power and authority to bind the Additional Sellers to this Agreement. This Agreement constitutes a valid and binding obligation of the Seller enforceable against it in accordance with its terms, subject to Couit Approval, except (a) as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors generally, and (b) as such enforceability may be limited by general principles of equity, regardless of whether asseited in a proceeding in equity or law.
4.3 Approvals and Consents
Except for (a) the Court Approval, (b) the Regulatory Approvals, (c) the consents, approvals or waivers set forth on Schedule 4,3 that are required in connection with the assignment of a Purchased Asset, and (d) any consents required of counterpatties to non-Material Contracts, no authorization, consent or approval of, or filing with or notice to, any Governmental Authority, court or other Person is required in connection with the execution';delivery or performance of this Agreement by the Seller or any Additional Seller and each of the agreements to be executed and delivered by the Seller or any Additional Seller or the purchase of any of the Purchased Assets hereunder, the absence ol'which would individually or in the aggregate materially impair the ability of the Buyer and the Seller to complete the transactions contemplated by this Agreement or materially impair the ability of the Buyer to own the Purchased Assets and to operate the Purchased Business after the Closing in substantially the same manner as it is operated as of the date of this Agreement.
4.4 Non-Contravention
Neither the execution and delivery of this Agreement or any other &agreement or document to which the Seller or any Additional Seller is or will become a party as contemplated by this Agreement, the consummation of the transactions contemplated herein or therein nor compliance by the Seller or any Additional Seller with any provisions hereof or thereof will (a) conflict with or result (with or without notice, lapse of time or both) in a breach of any of the terms, conditions or provisions of the atticles, by-laws or other constating documents of the Seller or any Additional Seller, or (b) conflict with or result in a bteach or a default (or give rise to any right of termination, cancellation, acceleration, modification or other right) under any of the provisions of any note, bond, mortgage, indenture, franchise, permit, material contract or other instrument or obligation to which the Seller or any Additional Seller is a party, or by which the Seller or any Additional Seller is bound or affected, except for (i) any conflict, breach or default as to which requisite waivers or consents shall have been obtained by the Seller or any 1 25
OMWEST S8961669 v29 —54
Additional Seller before Closing, (ii) breaches which, upon receipt of Court Approval, shall not impede the Closing, and (iii) breaches relating to the failure to obtain consent under the terms of a contract that is not a Material Contract, which the Seller agrees to seek assignments for in the Court Orders.
4.5 Title
(a) Except as set forth in Schedule 4.5, the Seller or the Additional Sellers are the sole legal and beneficial owners, lessees or. licensees of the Purchased Assets, with good and valid title, or a valid leasehold or licensed interest, in the Purchased Assets, free and clear of all Encumbrances except the Permitted Encumbrances. Upon delivery to the Buyer on the Closing Date of the instruments of transfer contemplated by Section 11.2,and subject to the terms of the Court Orders, the Seller or the Additional Sellers will thereby transfer to the Buyer good and valid title to, or, in the case of property leased or licensed by the Seller or the Additional Sellers, a valid leasehold or licensed in1erest in, all of the Purchased Assets, free and clear of all Encumbrances except for Assumed Liabilities and the Permitted Encumbrances.
(b) The Purchased Assets constitute all of the assets that are necessary and sufficient to conduct the Purchased Business in the manner conducted as of the date of this Agreement, except for the Excluded Assets.
(c) The Purchased Assets are, and at the Closing Date will be, in sufficient working order and condition to operate the Purchased Business as it is operated as of the Effective Date,
4.6 Contracts
Subject to receipt of the Court Approval, each of the Assumed Contracts forming part of the Purchased Assets that is a Material Contract is in full force and effect and constitutes a legal, valid and binding obligation of an Asset Seller, and the other parties thereto, enforceable in accordance with its terms, and such Asset Seller, is entitled to all of the benefits, rights and privileges under each such Assumed Contract, Except as set forth on Schedule 4.6, none of the Asset Sellers has received any notice that any Person intends or desires to modify, waive, amend, rescind, release, cancel'or terminate any Assumed Contract forming part of the Purchased Assets that is a Material Contract. Except as set forth on Schedule 4.3, no Assumed Contract that is a Material Contract requires the consent of any Person for such Assumed Contract to be assigned to the Buyer. There is no contract, agreement or other arrangement granting any Person any preferential right to purchase any of the Purchased Assets, other than such as shall be abrogated by the Court Approval.
4.7 Public Company Reports; Financial Statements; Effective Date Balance Sheet
{a) The Seller has made available to the Buyer each prospectus, report, proxy statement or information statement or other documents filed or furnished by its parent issuer Cinram International Income Fund (the "Parent" ) with the Ontario Securities Commission ("OSC")on or after January 1, 2010 (collectively, the "Parent Reports" ), and the Parent has filed or furnished all forms, reports and documents required to be filed or furnished by it with the OSC pursuant to relevant securities statutes, regulations, policies and rules since such time. As 26
DMWEST 48961669 v29 of their respective dates, the Parent Reports (i) were prepared in accordance with the applicable requirements of the Securities Acr (Ontario) and the rules and regulations thereunder and complied with the then applicable accounting requirements, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to mal&e the statements made therein (with respect to any prospectus, in the light of the circumstances under which they were made) not misleading.
(b) Each of the consolidated balance sheets included in or incorporated by reference into the Parent Reports (including the related notes and schedules) fairly presents in all material respects the consolidated financial position of the Parent and its subsidiaries as of its date and each of the consolidated statements of earnings, cash flows and unitholders'quity included in or incorporated by reference into the Parent Reports (including any related notes and schedules) fairly presents in all material respects the results of operations, cash flows or changes in unItholders'quity, as the case may be, of the Parent and its subsidiaries for the periods set forth therein, in each case in accordance with GAAP, except, in the case of unaudited statements, for year-end audit adjustments and as otherwise may be noted therein. There are no obligations or liabilities of any nature, whether accrued, absolute, contingent or otherwise, of the Parent or any of its subsidiaries, other than those liabilities and obligations (i) that are disclosed or otherwise reflected or reserved for in the fiiihpcial statements and the notes thereto included in the Parent Reports (the "Parent Financial Statements" ), provided that such liabilities are reasonably apparent on the face of the Parent Financial Statements, (ii) that are not required under GAAP to be disclosed, reflected or reserved for in the Pareiit Finai|cial Statements, (iii) th'at have been incurred in the ordinary course of business since March 31, 2012, (iv) related,to expenses associated with the transactions contemplated by this A'greement, or (v) that have not had and would not reasonably be expected to have a Material Adverse Effect.
(c) Based on the evaluation of Parent's controls and procedures conducted in connection with the preparation and filing of the Parent Reports, the Seller has no knowledge of (i) any signilicant deficiencies or material weaknesses in the design or operation of the internal control over financia reporting that are lil&ely to adversely affect the Parent's ability to record, process, summarize and report financial data, or (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Parent's interiial control over financial reporting,
(d) Without limiting the generality of the foregoing provisions of this Section 4.7, the Balance Sheet of the Purchased Business dated as of the Effective Date and attached hereto as Exhibit G (the "Effective Date Balance Sheet") fairly presents in all material respects the financial position of the Purchased Business as of the Effective Date. The cash collateral assets securing the Letters of Credit retained by the Seller pursuant to Section 2.2(l) are not included as current assets on the Effective Date Balance Sheet.
4.8 Receivables, Payables and Inventories
(a) The Asset Sellers'ccounts Receivable (collectively, the "Purchased Accounts Receivable" ) reflect valid transactions in the ordinary course of'business;
1
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DMWEST 86961669 v29 56
(b) None of the Purchased Accounts Receivable is or was subject to any counterclaim or set off (excluding royalty adjustments) that would adversely affect the Purchased Business;
(c) To the Seller's knowledge, the Purchased Accounts Receivable are collectible in the ordinary course of business using normal collection practices, less the amount of applicable reserves for doubtful accolii'its and allowances set forth on the Effective Date Balance Sheet;
(d) All of the Accounts Payable included in the Assumed Liabilities arose in bona fide, arms-length transactions in the ordinary course of business; and
(e) The Asset Sellers have good and marketable title to their Inventories, free and clear of all Encumbrances other than Permitted Encumbrances. All such Inventories, net of obsolescence reserves, are in good and merchantable condition in all material respects and are suitable and usable for the purposes for which they are intended,
4.9 Intellectual Property
Except as has been disclosed in writing by the Seller to the Buyer in a writing that references this Section 4,9:
(a) an Asset Seller ovks or possesses sufficient legal rights to all Intellectual to conduct the Purchased Business as now conducted and as presently proposedPropel'ecessary to be conducted, without any infringement of the rights of any other Person, all of which is included in the Purchased Assets (the "Transferred Intellectual Property" );
(b) except as set forth on Schedule 4.9, there are no outstanding options, licenses or contracts relating to any material Transferred Intellectual Property, nor is an Asset Seller bound by or a party to any contract of any kind with respect to any material Transferred Intellectual Property other than such licenses or contracts arising from the purchase of "offthe shelf'r standard products;
(c) all licenses of Transferred Intellectual Property are in full force and effect in accordance with their. terms, and neither an Asset Seller nor the counterparty thereto is in material breach thereof; and
(d) there is no action, suit, proceeding or investigation filed or pending or, to the knowledge of the Seller, threatened against an Asset Seller that questions the validity of any Transferred Intellectual Property or that alleges an Asset Seller has violated the Intellectual Property of another Person which if successful would have a Material Adverse Effect on the Purchased Business.
4.10 Environmental Matters
Each of the Asset Sellers (a) is in compliance with Environmental Law, and (b) has obtained and is in compliance with all Environmental Permits required for the occupation of its facilities and the operation of the Purchased Business, except where failure to comply with Environmental Laws, or to obtain or comply with Environmental Permits, would not reasonably 28
DMWEST 48961669 v29 be expected to have, individually or in the aggregate, a Material Adverse Effect. None of the Asset Sellers has received any written communication, whether from a Governmental Authority, employee or otherwise, alleging that it is not in such compliance. No Environmental Claims are pending with respect to the Purchased Business, and to the Seller's knowledge, no Environmental Claims have been threatened against the Purchased Business in writing.
4.11 Labour and Employee Benefits Matters
(a) The Seller has provided the Buyer with a complete and current copy of the plan document of each Assumed Employee Plan or, if such plan document does not exist, an accurate written summary of such Assumed Employee Plan and, as applicable and they relate to any Assumed Employee Plan: (i) any trust agreements; (ii) the most recent financial and accounting statement and repoit; (iii) the most recent actuarial report; (iv) the most recent annual information returns or other returns filed with any Governmental Authority; (v) insurance policies; (vi) administration or investment agreements; and (vii) the most receni, employee booklet with respect to each Assumed Employee Plan.
(b) There is not currently pending or, to the knowledge of the Seller, any threatened strike, material arbitration, materjal labour dispute or material grievance under any collective labour agreement related to the Purchased Business, or any material slowdown, lockout or work stoppage against or affecting an Asset Seller.
(c) All amounts for unpaid vacation pay, wages, salaries, paid time off, reimbursable employee expenses, commissions or bonuses have been adequately accrued for all Assumed Employees, Since the Effective Date, the Seller has incurred no material liability for termination or severance pay to employees of the Business.
(d) Section 11 of the Data Room contains true and complete copies of all collective labour agreements of the Asset Sellers that pertain to the employees of the Purchased Business, which have been provided to the Buyer. To the knowledge of the Seller, there are no current attempts to organize, certify or establish ariy labour union or employee association with respect to the employees of the Purchased Business.
(e) No Assumed Employee Plan provides benefits, including death or medical benefits (whether or not insured) beyond retirement or other termination of service other than (i) coverage mandated solely by Applicable Law, (ii) death benefits or retirement benefits under any pension plan, or (iii) benefits the full costs of which are borne by participants and not by the applicable Asset Seller, the employer or sponsor;
(f) Each of the Asset Sellers is in material compliance with all Applicable Laws respecting employment and employment practices, including all laws iespecting terms and conditions of employment, health and safety, wages and hours, worker classifications, child labour, immigration, employment discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers'ompensation, labour relations, employee leave issues and unemployment insurance. None of the Asset Sellers has received any written communication, whether from a Governmental Authority, employee or otherwise, alleging that it is not in such material compliance. 29
DMWEST 46961669 v29 58
(g) %"ith respect to each Assumed Employee Plan: (i) if it covers employees in the United States and is intended to qualify under Section 401(a), 401(k) or 403(a) of the Code, such plan and the related trust has received a favourable determination letter fi'om the United States Internal Revenue Service that has not been revoked and there is no basis for the revocation of such letter; {ii)it is and has been established, funded and administered in compliance in all material respects with its terms, Applicable Law and any collective labour agreements, as applicable, and none of the Asset Sellers have received any notice from any Person or Governmental Authority questioning or challenging such compliance; (iii) there is no investigation by 6 Governmental Authority nor any pending or, to the knowledge of the Seller, threatened claims in writing against, by or on behalf of any Assumed Employee Plan or the assets, fiduciaries or administrators thereof (other than routine claims for benefits); and to the knowledge of the Seller no fact exists which could reasonably be expected to give rise to any such investigation or claim; and (iv) all required employee and employer contributions, premiums and expenses, to or iit respect of, such Assumed Employee Plans have been timely paid in full in accordance with their terms and Applicable Laws or, to the extent not yet due, have been adequately accrued.
{h) No amendments or improvements have been made to any Assumed Employee Plan and no commitments to unend or improve any Assumed Employee Plan have been made or promised by the Asset Sellers, nodllas any intention to do so been communicated to any employee of the Seller since December 31, 2011 (other than as set forth in the definition of KERP ) 4.12 Compliance with Laws; Permits
None of the Asset Sellers has recei'ved written notice from any Governmental Authority that it is in violation in any material respect of any Applicable Law in respect of the conduct of the Purchased Business or the ownership of its assets and properties. The Asset Sellers have not received written notice that any material Permits currently held are not in good standing and full force and effect.
4.13 Litigation
Except as disclosed in Section 10 of the Data Room, there is no action, suit, proceeding or investigation filed or pending or, to the knowledge of the Seller, threatened against an Asset Seller that would reasonably be expected to result, either individually or inde aggregate, in any Material Adverse Effect, No Asset Seller is a painty or subject to an Order that has not been completely satisfied.
4.14 Insurance
Section 14 of the Data Room contains a complete and accurate list and description of all primary, excess and umbrella policies, bonds and other forms of insurance currently owned or held by or on behalf of and/or providing insurance coverage related to the Purchased Business. All such policies are iri full force and effect, and with respect to such policies, all premiums currently payable or previously due have been paid, and no notice of cancellation or terinination ha~ been received with respect to any such policy. 30
DMWEST 56961669 v29 4.15 Huntsville, Alabama Real Property
(a) Cinram, Inc. is the sole tenant under that certain Amended and Restated Lease Agreement dated as of September 1, 1987, by and between The Industrial Development Board of the City of Huntsville (the "IDB"),as lessor, and Laservideo, Inc., as lessee, as amended (the "IDB Lease"). The Seller has delivered to the Buyer a true and complete copy of the IDB Lease.
(b) The IDB Lease is in full force and effect. Neither Cinram, Inc. nor the IDB is in breach or default under the IDB Lease, nor has Cinram, Inc. received any written notice alleging any breach or default, and no event has occurred or circumstance exists which, with the delivery of notice, the passage of time, or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under the IDB Lease. Cinram, Inc. has not subleased, licensed, collaterally assigned or otherwise granted to any Person the right to use or occupy any portion of the Huntsville Facility except puisuant to the Facility Lease Agreement and Facility Lease Sublease Agreement disclosed in Section 4 of the Data Room that will be terminated pursuant to Section 11.2(a)(vi).
(c) The Bonds (as defined in the IDB Lease), including all principal and interest, have been paid in full and all fees charges and disbursements of the Trustee (as defined in the IDB Lease) have been paid by Cinram, Inc. to the Trustee and by the Trustee to the holders of the Bonds. The option to purchase the I&untsville Facility (the "Option" ), as set forth in Sectiori 11.2of the IDB Lease, remains in full force and effect.
(d) As of June 1, 2012, the total purchase price (the "Huntsville Facility Purchase Price") payable to the IDB pursuant to the exercise of the Option is $843,390, which increases at the rate of $3,333.33per month ($40,000 per year), from and after June 1, 2012. Pursuant to Section 5 of that certain Partial Assignment of Lease and Equity in Project dated as of March 26, 1999, by and between Disc Manufacturing, Inc., as assignor, Cinram, Inc., as assignee, and the IDB (the "Partial Assignment" ), Cinram, Inc. has the option to reduce the Huntsville Facility Purchase Price to $55,000 plus $ 1,000 for each 12 month period that elapses after April 1, 1991 (the "Reduced Purchase Price") if Cinram, Inc. pays the Board the Purchase Price Modification Payment (as defined in the Partial Assignment). On the date hereof the Purchase Price Modification Payment is $746,000, which increases by $39,000 for each 12-month period that elapses after February 1, 2012, Unless the IDB Lease is amended as set forth in Section 4.15(e), the total amouiit that would be required to be paid to the IDB in connectiori with the exercise of the Option and the purchase of the Huntsville Facility at the Closing would be either (i) the amount of the Huntsville Purchase Price, or (ii) the sum of the amount of the Purchase Price Modification Payment plus the Reduced Purchase Price.
(e) The IDB has approved an amendment to the IDB Lease pursuant to which the Huntsville Facility Purchase Price would be fixed at $55,000 (without any requirement to make a Purchase Price Modification Payment), provided that a lease amendment fee in the amount of $366,000 is paid. The Sellei shall pay the $366,000 lease amendment fee at the direction of the Buyer prior to the Closing, so that at the Closing, the Option exercise price shall be fixed at $55,000, Further, if the Buyer so requests in writing not less than thirty-five (35) days prior to the Closing Date, the Seller shall cause the Option to be exercised by Cinram, Inc. so that at the
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DMWEST 08961669 v29 —60
Closing fee title to the Huntsville Facility shall transfer to Buyer or its nominee. The Option exercise price will be borne by the Buyer at the Closing. Without liiniting the genera! ity of the foregoing, at the timely request of the Buyer, Cinram, Inc. will notify the IDB in writing not less than thirty (30) days prior to the Closing Date that the Option is being exercised and that the purchase of the Huntsville Facility pursuant to the exercise of the Option will occur concurrently with the Closing,
(f) Except as disclosed by the Seller to the Buyer in a separate writing referencing this section, there are no outstanding options, rights of first offer or rights of first refusal to purchase or lease the IIuntsville Facility or any portion thereof or interest therein, except for the rights to purchase pursuant to that certain Warranty Deed, dated May 5, 1975, by and between Madison County, Alabama, as grantor, and the IDB, as grantee, recorded in Deed Book 507, Page 643, et seq., in the Office of the Judge of Probate, Madison County, Alabama (the "Madison Purchase Right" ), which by its terms expired on May 5, 1985. Prior to the Closing Cinram, Inc. will obtain either a recordable instrument from Madison County terminating the Madison Purchase Right or affirmative coverage from the title company'nsuring Purchaser's interest free and clear of the Madison Purchase Right,
4.16 Competition Act
The Asset Sellers and their Affiliates do not have assets in Canada that exceed $300 million, or gross revenues from sales in, from or into Canada, that exceed $300 million, all as determined in accordance with Part IX of the Competition Act {Canada) and the No'tifiable Transactions Regulations thereunder.
4.17 ICA
For purposes of the ICA and the regulations thereunder:
(a) the Seller. is a non-Canadian within the meaning of the ICA;
(b) the relevant financial statements for the Asset Sellers, 1362806 Ontario Limited and Cooperatie Cinram Netherlands UA for the purposes of determining the applicable value of the assets of the Asset Sellers, 1362806 Ontario Limited and of Cooperatie Cinram Netherlands UA are set out in the financial statements attached hereto as Exhibit H (collectively, the "ICA I&'inancial Statements" );
(c) the asset value of the intercompany investment in Cooperatie Cinram Netherlands UA in the Seller's December 31, 2011 balance sheet foiTning part of the ICA Financial Statements is $ 1,097,041.28,and the asset value of the intercompany investment in Cooperatie Cinram Netherlands UA in 1362806 Ontario Limited's December 31,2011 balance sheet forming part of the ICA Financial Statements is $33,712,075; and
{d) Cooperatie Cinram Netherlands UA does not carry on a Canadian business or control, directly or indirectly, an entity carrying a Canadian business or an entity in Canada.
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DMWEST 46961669 v29 4.18 Hart Scott Rod ino Antitrust Improvement Act
The non-United States assets owned by the Seller and the Additional Sellers did not generate sales in or into the United States of $68.2 million or more during the most recent fiscal year of the Seller and the Additional Sellers,
4.19 Euro pean Business
The Seller hereby makes the representations and warranties set forth in Exhibit I (the "European Representations" ), and acknowledges that the Buyer is relying on the European Representations in connection with its purchase of the Purchased Assets.
4.20 Additional Sellers
The Additional Sellers will and do hereby provide the representations set farth in this Article 4, mutatis mutandis.
ARTICLE 5, —REI'RESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows and acknowledges that the Seller is relying upon the fallowing representations and warranties in connection with its sale of the Purchased Assets:
5.1 Corporate Power
The Buyer is a corporation existing under the laws of the State of Delaware and has all necessary corporate power, authority and capacity to enter into this Agreement and make the Offer and the agreements contemplated hereunder and thereunder and to carry out its obligations hereunder and thereunder.
5.2 Due Authorization and E&.nforceability of Obligations
The execution and delivery of this Agreement and the Offer and the consummation af the transactions contemplated by this Agreement and the Offer have been duly authorized by all necessary corporate action of the Buyer. This Agreement and the Offer constitute valid and binding obligations of the Buyer en forceable against it in accordance with their terms, subject to Court Approval, except (a) as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors generally, and (b) as such enforceability may be limited by general principles of equity, regardless of whether asserted in a proceeding in equity or law.
5.3 Approvals and Consents
Except for the Court Approval, the Regulatory Approvals and any consents that may be required in connection with the assignment of. a Purchased Asset and the transactions contemplated by the Offer, no authorization, consent or approval of, or filing with or notice to, any Governmental Authority, court or other Person is required in connection with the execution, \ 33
DMWEST ¹6961669v29 —62
delivery or performance of this Agreement or the Offer by the Buyer and each of the agreements to be executed and delivered by the Buyer or the purchaser of any of the Purchased Assets hereunder or the completion of the transaction contemplated by the Offer, the absence of which would materially impair the ability of the Buyer and the Seller to complete the transactions contemplated by this Agreement.
5.4 Financing
The Buyer has, and on the Closing Date, will have, sufficient funds to consummate the transactions contemplated by this Agreement and the Offer, including payment of'he Purchase Price and assumption of the Assumed Liabilities and the payment of the European Purchase Price.
5.5 GST Registration
Prior to Closing, the Buyer (or the entity acquiring the Canadian Purchased Assets, if not the Buyer) will be registered for the purposes of the GST Legislation and will provide its registration number to the Seller.
5.6 Com petition
The Buyei and its Affiliates do not have assets in Canada that exceed $ 100 million in aggregate value, or gross revenues from sales in, from or into Canada, that exceed $ 100 million, all as determined in accordance with Pait IX of the Competition Act (Canada) and the Notifiable Transactions Regulations theretuider.
ARYICLE 6. —ASSKYS
6.1 As is, %here Is
The Buyer is an informed and sophisticated purchaser, and has engaged expert advisors, experienced in the evaluation and purchase of property and assets such as the Purchased Assets as contemplated hereunder and the European Business as contemplated by the Offer. The Buyer has undertaken such investigations and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement. TIIE BUYER ACI(NOWLEDGES AND AGREES TIIAT TILE PURCFIASED BUSINESS, TI-IE PURCHASED ASSETS AND TIIE EUROPEAN BUSINESS ARE SOLD "AS IS, WFIERE IS", WITH ALL FAULTS, WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPE.IED, IN FACT OR BY LAW WITH RESPECT TO THE PURCHASED BUSINESS, THE PURCHASED ASSETS OR THE EUROPEAN BUSINESS EXCEPT AS SET FORTI-I HEREIN OR IN THE OFFER, AND WITHOUT ANY RECOURSE TO TIRE SELLER OR ANY OF ITS DIRECTORS, OFI"ICERS, SHAREHOLDERS, REPRESENTATIVES OR ADVISORS, OT'PIER THAN FOR FRAUD OR AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR IN TI-IE OFFER, THE BUYER AGREES TO ACCEPT THE PURCHASED BUSINESS, THE PURCHASED ASSETS, TIIE ASSUMED LIABILITIES AND THE EUROPEAN BUSINESS IN THE CONDITION, STATE AND 34
DMWEST 08961669 v29 LOCATION THEY ARE IN ON THE CLOSING DATE BASED ON ITS OWN INSPECT'ION, EXAMINATION AND DETERMlNATION WITI-I RESPECT TO ALL MATTERS AND WITHOUT RELIANCE UPON ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES OF ANY NATURE MADE BY OR ON BEHALF OF OR IMPUTED TO THE SELLER, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, Unless specifically stated in this Agreement, no representation, warranty, term or condition, understanding or collateral agreement, whether statutory (including under the Sale ofGoods Ac( (Ontario)), express or implied, oral or written, legal, equitable, conventional, collateral or otherwise, is being given by the Seller in this Agreement or in any instrument furnished in connection with this Agreement, as to description, fitness for purpose, merchantability, quantity, condition, quality, value, suitability, durability, assignability or marketability thereof, or in respect of any other matter or thing whatsoever. Without limiting the generality of the foregoing, the Buyer acknowledges that the Seller does not make any representation or warranty with respect to; (a) any projections, estimates or budgets delivered to or made available to the Buyer of future revenues, future results of operations (or any component thereof), future collection of Accounts Receivable, future cash flows or future financial condition (or any component thereof) of the Purchased Business or the European Business or the future business operations of the Purchased Business or the European Business; or (b) any other information or documents made available to the Buyer or its counsel, accountants or advisors wi(h respect to the Business, except as expressly set forth in this Agreement.
6.2 Diligence
The Buyer aclcnowledges and agrees that: (a) it has had an opportunity to conduct. any and all due diligence regarding the Purchased Assets, the Assumed Liabilities and the European Business prior to the execution of this Agreement; (b) it has relied solely upon this Agreement and its own independent review, investigation and/or inspection of any documents and/or the Purchased Assets, the Assumed Liabilities and/or the European Business; (c) it is not relying upon any written or oral statements, representations, promises, wmYanties or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the Purchased Assets, Assumed I.iabilities or the European 13usiness, except as expressly stated in this Agreement; and (d) the obligations of the Buyer under this Agreement are not conditional upon any additional due diligence.
ARTICLE 7. —CONDITIONS
7.1 Conditions for the Benefit of the Buyer and the Seller
The obligation of the Buyer and of the Seller to complete the purchase of the Purchased Assets and the Assumed Liabilities pursuant to this Agreement is subject to the satisfaction of, or compliance with, on or prior to the Closing Date, each of the following conditions;
(a) no provision of any Applicable Law and no judgment, injunction, order or decree that prohibit the consummation of the purchase and sale of the Purchased Assets pursuant to this Agreement shall be in effect;
OMWEST 08961669 v29 —64
(b) the Canadian Court and (he Bankruptcy Court, as applicable, shall have granted the Court. Orders and the Court Orders shall be in full force and effect; and
(c) all Regulatory Approvals shall have been obtained, or the applicable waiting times, if any, shall have expired.
7.2 Conditions for the Benefit of the Buyer
The obligation of the Buyer to complete the purchase of the Purchased Assets and the Assumed Liabilities pursuant to this Agreement is subject to the satisfaction of, or compliance with, or waiver by the Buyer of, on or prior to the Closing Date, each of the following conditions (each of which is acknowledged to be for the exclusive benefit of the Buyer):
(a) the representations and warranties of the Seller set forth in this Agreement shall be true and correct in all respects at Closing with the same force and effect as if made at and as of such time, except: (i) that to the extent such representations and warranties expressly speak as of an earlier date (e.g. speaking "as at the date hereof'), such representations and warranties shall be true and correct in all respects as of such specified date; and (ii) for any inaccuracies, as at Closing that would not, individually or in the aggregate, result in a Material Adverse Effect;
(b) the.covenants contained in this Agreement to be performed by ihe Seller at or prior to Closing shall have been performed in all material respects as at Closing;
(c) the Purchased Assets shall be assigned and transfeiTed to the Buyer free and clear of all Encumbrances, other than Permitted Encumbrances, pursuant to the Court Orders, requisite consents or a legal, equitable, statutory or court-based proceeding, action or process;
(d) the Buyer shall have received a certificate confirming the satisfaction of the conditions contained in Sections 7.2(a) and 7,2(b), signed for and on behalf of the Seller without personal liability by an executive officer of the Seller, in each case in form and substance reasonably satisfactory to the Buyer;
(e) the Seller shall have satisfied its obligations set forth in Section 11.2(a)in all material respects;
(f) the Material Contracts referenced in clauses (a) and (b) of the definition of that term which are designated by the Buyer for assumption and assignment pursuant to Section 9.2 shall have been assigned or transferred to the Buyer or its nominees, or replaced by new contracts with, or otherwise dealt with in a manner acceptable to, the Buyer;
(g) the consents of the Material Customers shall have been obtained, including consents to such reasonable amendments to the Assumed Contracts with'the Material Customers as may be communicated by the Buyer to the Seller;
(h) consents of the European Material Customers satisfactory to the Buyer shall have been obtained, including consents to such reasonable amendments to the contracts with the European Material Customers as may be communicated by the Buyer to the Seller; and 36
DMWEST ¹8961669v29 (i) there shall not have occurred any changes, effects or circumstance constituting, or which would be reasonably likely to result in, a Material Adverse Effect.
7,3 Conditions for the Benefit of the Seller
The obligation of the Seller to complete the sale of the Purchased Assets and the Assumed Liabilities pursuant to this Agreement is subject to the satisfaction of, or compliance with, or waiver where applicable, by the Seller of, on or prior to the Closing Date, each of the following conditions (each of which is acknowledged to be for the exclusive benefit of the Seller):
(a) the representations and warranties of the Buyer set forth in this Agreement shall be true and correct in all material respects at Closing with the same force and effect as if made at and as of such time, except that to the extent such representations and warranties expressly speak as of an earlier date, such representations and warranties shall be true and correct in all respects as of such specified date;
(b) the covenants contained in this Agreement to be performed by the Buyer at or prior to Closing shall have been performed in all material respects as at Closing,
(c) the Seller shall have received a certificate confirming the satisfaction of the conditions contained in Sections 7.3(a) and 7.3(b), signed for and on behalf of the Buyer without personal liability by an executive officer of the Buyer, in form and substance reasonably satisfactory to the Seller; and
(d) the Buyer shall have satisfied its obligations set forth in Section 11,2(b) in all material respects.
ARTICLE S. —ADDITIONAI AGRKKMKNTS OF THK PARTIES
8.1 Access to Information
Subject to the terms of the Confidentiality Agreement, until the Closing, the Seller shall give to the Buyer's personnel engaged in this transaction and its accountants, legal advisers, consultants and other representatives during normal business hours reasonable access to its premises and to all of the books and records relating to the Purchased Business, the Purchased Assets, the Assumed Liabilities and the European Business, and to the Seller's personnel, and shall furnish them with all such information relating to the Purchased Business, the Purchased Assets, the Assumed Liabilities and the European Business as the Buyer may reasonably request in connection with the transactions contemplated by this Agreement. Notwithstanding anything in this Section 8.1 to the contrary, any such investigation shall be conducted upon reasonable advance notice and in such manner as does not materially disrupt the conduct of the Business.
S.2 Conduct of Business Until Closing
Except: (a) as expressly provided in this Agreement; (b) with the prior written consent of the Buyer (not to be unreasonably withheld or delayed); (c) as necessary or advisable in 37
DMWEST «8961669 v29 —66
connection with the CCAA Proceedings and/or Chapter 15 Proceedings; or (d) as otherwise provided in the existing Court Orders or any further order of the Canadian Court or Bankruptcy Couit in connection with the CCAA Proceedings or Chapter 15 Proceedings, prior to the Closing, to the extent reasonably practicable having regard to the CCAA Proceedings and Chapter 15 Proceedings, the Seller shall, and shall cause the Additional Sellers to:
(a) operate the Purchased Business only in the ordinary course in all material respects, consistent with past practice, except to the extent otherwise required by Applicable Law and the Seller's contractual obligations (and in such cases, the Seller shall consult with and so advise the Buyer with respect to the actions taken);
(b) use commercially reasonable efforts to preserve the business organization of the Purchased Business, including the services of its officers and employees, and its business relationships and goodwill with customers, suppliers and others having business dealings with it;
(c) after consultation with the Buyer, but subject to Section 2.4 and Section 3.2, pay and discharge the debts authorized by the Canadian Court in connection with the CCAA Proceedings and the Bankruptcy Court in connection with the Chapter 15 Proceedings, including (i) payments on any debtor-in-possession financing facility which has been approved by the Buyer and used for the ongoing operation of the Business, it being the intent of the parties t'hat such facility will be repaid in full by the Asset Sellers immediately prior to the Closing, and (ii) payments of amoun1,s owing to critical suppliers and licensors for goods and services supplied both before and after the CCAA Proceedings and Chapter 15 Proceedings, including under any Assumed Contracts;
(d) not transfer, lease, license, sell or otherwise dispose of any of the Purchased Assets, other than inventory or obsolete assets in the ordinary course of the Business, consistent with past practice;
(e) not enter into any contracts that would constitute a Material Contract without the consent of the Buyer;
(f) not enter into any contracts with any Affiliates of the Parent;
(g) not enter into, adopt, amend or terminate any contract relating to the compensation or severance of any employee of the Purchased Business, except in the ordinary course of business after consultation with the Buyer;
(h) not make any material change to its accounting (including Tax accounting) methods, principles or practices, except as may be required by GAAP;
(i) not declare or pay any dividends or distributions;
(j) not issue or sell any capital stock or other equity interests or options, warrants, calls, subscriptions or other rights to purchase any capital stock or other equity interests of the Seller; or
DMWEST ¹8961669v29 (k) agree in writing to take any of the actions described in sub-clauses (a) through (i) above.
Notwithstanding the foregoing, it is acknowledged and agreed that the Seller may arrange and pay the premium for tail directors and officers'nsurance for its directors, officers and trustees,
S.3 Approvals and Consents
(a) To the extent required by Applicable Law, each of the. Parties agrees to use commercially reasonable efforts to prepare and file as promptly as practicable and, in any event, within ten (10) days fiom the execution of this Agreement, all necessary documents, registrations, statements, petitions, filings and applications for any Regulatory Approvals, and shall request expedited processing if available. All filing fees payable in respect of any such filing shall be paid by the Buyer.
{b) For the purposes of the Regulatory Approvals, the Buyer and the Seller agree to:
(i) cooperate with each other in connection with any filing or submission and in connection with any investigation or other inquig, including any proceeding initiated by a private party;
(ii) promptly notify each other of any communication (whether written or oral) received by such Party from, or given by such Party to, any Governmei'ital Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby;
(iii) give each other reasonable notice of all meetings and telephone calls with any Governmental Authority and give a reasonable opportunity to paiticipate in them (excep( to the extent that a Governmental Authority expressly requests that either party should not be present at the meeting or part or parts of the meeting); and
(iv) provide each other with drafts of all written communications intended to be sent to any Governmental Authority, including in connection with any proceeding by a private party, give each other a reasonable opportunity to comment on them, no( send such communications without the prior approval of the other (such approval not to be unreasonably withheld or delayed) and provide each other with final copies of all such communications (except that in relation to all disclosures under this subclause (iv), business secrets and other confidential material may be redacted so long as each party acts reasonably in identifying such material for redaction).
The foregoing obligations in this Section 8.3(b) shall be subject to any attorney-client, work product or other privilege, and each of the Parties shall coordinate and cooperate fully with the other Party in exchanging such information and providing such assistance as such other Parties may reasonably request in connection with the foregoing.
39
DMWEST 08961669 v29 —68
(c) If any objections are asserted with respect to the transactions contemplated hereby under any Applicable Law or if any suit is instituted by any Governmental Authority or any private patty challenging any of the transactions contemplated hereby as violative of any Applicable Law or if a filing pursuant to this Section 8.3(c) is reasonably likely to be rejected or conditioned by a Governmental Authority, each of the Parties shall use commercially reasonable efforts to resolve such objections or challenge as such Governmental Authority or private party may have to such transactions, including to vacate, lift, reverse or overturn any action, whether temporary, preliminary or permanent, so as to permit consummation of the transactions contemplated by this Agreement.
{d) In addition, each Party shall use its commercially reasonable efforts to satisfy (or cause the satisfaction of) the conditions precedent to such Party's obligations hereunder as set forth in Arl,icle 7 l.o the extent the same is within its control and to take, or cause to be taken, all other action and to do, or cause to be done, all other things reasonably necessary, proper or advisable under all Applicable Law to consummate the transactions contemplated by this Agreement, including using its commercially reasonable efforts to obtain all consents, approvals or authorizations required in connection with the assignment of the Personal Property Leases, Real Property Leases and the Assumed Contracts to the Buyer.
{e) For greater certainty„nothing in this Section 8,3 shall require the Buyer to offer, commit or undertake any commitments or obligations or accept any terms or conditions that would individually or in the aggregate require material. expenditures or investments by the Buyer, materially restrict the Buyer's ability to operate or re-structure the I'urchased Business or require any employment commitments that materially exceed the Buyer's obligations as set out in Section 8,7.
8,4 Access of the Seller and the Buyer to Records
{a) The Seller shall, for a period of six years from the Closing Date, have access to, and the right to copy, at its expense, for bona fide business purposes and for purposes of the CCAA Proceeclings and Chapter 15 Proceedings, and during usual business hours, upon reasonable prior notice to the Buyer, all books and records relating to the Purchased Business, the Purchased Assets and the Assumed Liabilities which are transferred and conveyed to the Buyer pursuant to this Agreement, The Buyer shall retain and preserve all such books and records for such six year period.
(b) From and after the Closing, the Asset Sellers shall retain all books and records of the Assets Sellers and the Buyer shall have access to, and the right to copy, at its expense, for bona fide business purposes, and during usual business hours, upon reasonable prior notice to the applicable Asset Seller, all books and records of the Asset Sellers. The Asset Sellers shall retain and preserve all such books and records for a period six years following the Closing.
8.5 Further Assurances
Each of the Parties hereto slrall promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, all such further acts, documents and things as the other Party hereto may reasonably require &om time to time for the purpose of giving effect to this 40
DMWEST ¹8961669v29 Agreement and shall use commercially reasonable efforts and take all such steps as may be . reasonably within its power to fulfill the conditions and to implement to their full extent the provisions of this Agreement, provided that in no event shall the Seller be obligated to take any action that is lil&ely to result in a Material Adverse Effect, nor shall eithei Party be obligated to make a payment or deliver anything of value to a third party in order to obtain a consent, other than filing with and payment of filing fees to Governmental Authorities in connection with the Regulatory Approvals as provided in Section 8.3(a).
S.6 Tax Matters
(a) The Buyer and the Seller agree to furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance relating to the Purchased Assets and the Assumed Liabilities as is reasonably necessary for the preparation and filing of any Tax return, claim for refund or other required or optional filings relating to Tax matters, for the preparation for and proof of facts during any Tax audit, for the preparation for any Tax protest, for the prosecution of any suit or other proceedings relating to Tax matters and for the answer to any governmental or regulatory inquiry relating to Tax matters.
(b) For purposes of apy income Tax return related to the transactions contemplated in this Agreement, the Buyer and, to'the extent applicable, the Seller, agree to report the transactions contemplated in this Agreement in a manner consistent with the Purchase Price allocation determined in accordance with Section 3.3, and the Buyer and the Seller shall not voluntarily tal&e any action inconsistent therewith in any such Tax return, refund claim, litigation or otherwise, unless required by applicable Tax laws, The Buyer and the Seller shall each be responsible for the preparation of their own statements required to be filed under the Income 'I'ax hcj (Canada) and the Code and other similar forms in accordance with applicable Tax laws.
(c) All amounts payable by the Buyer to the Seller pursuant to this Agreement are exclusive of any GST, or any other federal, provincial, state or local or foreign value-added, sale, use, consumption, multi-staged, ad valorem, personal property, customs, excise, stamp, transfer., land or real property transfer, or similar Taxes, duties, or charges, or any recording or filing fees or. similar charges (collectively, "Transfer Taxes"). Transfer Taxes are the responsibility of the Buyer, including with respect to the Huntsville Facility if the Option is exercised. The Buyer. and the Seller agree to cooperate to determine the amount of Transfer Taxes payable in connection with the transactions contemplated under this Agreement.
(d) At the request of the Buyer, the Seller shall, together with the Buyer, jointly make the election provided for in paragraph 167(l)(b) of the GST Legislation to have subsection 167(1.1)of the GST Legislation apply in respect of the sale of the Purchased Assets under this Agreement, If the Buyer requests the Seller to make such election, the Buyer shall:
(i) file the election within the time prescribed by subsection 167(1,1)of the - GS'l'egislation; and
(ii) at all times indemnify and hold harmless the Seller and its directors, officers and employees, against and in respect of any and all amounts assessed by the Minister of National Revenue (Canada) (including all reasonable legal. and professional fees incurred by the 41
DMWEST 46961669 v29 —70
Seller or its directors, officers and/or employees, as a consequence of or in relation to any such assessment) as a consequence of the Minister determining, for any reason, that the election is unavailable, inapplicable, invalid or not properly made.
(e) The Seller and the Buyer will jointly execute, and each of them will file promptly following the Closing Date, an election under Section 22 of the Income Tax Act (Canada), and any corresponding provisions of any applicable provincial income Tax legislation with respect to any debts referred to in Section 22 and any corresponding provisions of any applicable provincial income Tax legislation. For the purposes of such elections, the Buyer, acting reasonably and in consultation with the Seller, will designate the portion of the Purchase Price allocable to the debts in respect of which such elections are made. For greater certainty, the Seller and the Buyer agree to prepare and lile their respective Tax returns in a manner consistent with such election(s).
(f) The Seller and the Buyer wil) jointly execute an election in the prescribed manner and within the prescribed time limits, to have the rules in subsection 20(24) of the Income Tax Act (Canada) apply to the obligations of the Seller in respect of undertakings which arise from the operation of the Purchased Business and to which paragraphs 12(1)(a) and 12(1)(e)of the Income Tax Act (Canada) apply. The Buyer and the Seller acknowledge that the Seller is transferring assets to the Buyer which have a value equal to the amount elected under subsection 20(24) of the Income Tax Act (Canada) as consideration for the assumption by the Buyer of such obligations of the Seller.
{g) The Buyer hereby waives compliance by the Seller with the Bulk Sales Act (Ontario), with section 6 of the Retail Sales Tax Act (Ontario) and with any similar provision contained in any other Applicable Law,
(h) To the extent permitted under subsection 221(2) of the GST Legislation and any equivalent or corresponding provision under any applicable provincial or territorial legislation, the Buyer shall self-assess and remit directly to the appropriate Governmental Authority any goods and services tax and harmonized sales tax imposed under the GST Legislation and any similar value added or multi-staged tax imposed by any applicable provincial or territorial legislation payable in connection with the transfer of any of the Real Property. The Buyer shall make and file a return(s) in accordance with the requirements of subsection 228(4) of the GST Legislation and any equivalent or corresponding provision under any applicable provincial or territorial legislation.
(i) The Seller and its Affiliates shall prepare and file, and pay the Taxes shown as due on any Tax returns in respect of the Purchased Business or the Purchased Assets, for all periods ending on or before the Closing Date, to the extent such Taxes would otherwise be or become an Encumbrance on the Purchased Assets or be imposed by the taxing authority on the Buyer as the p'urchaser of the Purchased Business or on the Purchased Assets. Further, (i) the Asset Sellers shall retain liability for all Taxes in respect of income, gross receipts or profits of the Asset Sellers or the Purchased Business (and, for clarity, not for other Taxes, including Transfer Taxes or Real Property Taxes) that relate to a period prior to the Closing Date, regardless of when asserted, and shall address such Taxes in the CCAA Proceedings and the Chapter 1S Proceedings, and (ii) the Buyer shall not assume or otherwise be liable for any Taxes
DMWEST 08961669 v29 in respect of income, gross receipts or profits of the Asset Sellers or the Purchased Business that relate to a period prior. to the Closing Date.
(j) The l3uyer shall be responsible for all Taxes of or with respect to the Purchased Business or the Purchased Assets for all periods beginning after the Closing Date and shall be responsible for preparing and filing all Tax returns in connection therewith.
S.7 Employee Matters
(a) Prior to but conditional on Closing and with effect on the Closing Date, the Buyer shall offer employment to all employees of the Seller and the other Asset Sellers who are engaged primarily in the Purchased Business, other than those employees who the Buyer designates in writing to the Seller prior to the Closing. Promptly following the execution of this Agreement, the Seller will provide the Buyer with such information concerning the employees and their compensation as the Buyer may reasonably request in order to make its determinations. Offers of employment by the Buyer shall be on terms substantially similar in the aggregate as those in effect immediately prior to Closing, The employees of the Seller and the other Asset Sellers who are engaged primarily in the Purchased Business, who are offered employment by the Buyer and who accept the Buyer's offer of employment, shall be referred to in (his Agreement as "Assumed Employees",
(b) The Buyer shall assume and be responsible for all liabilities and obligations with respect to the Assumed Employees that first arise following the Closing Date, including any required notice of termination, termination or severance pay (in each case whether required under Applicable I.aw or under contract), employment insurance, workplace safety and insurance/workers'ompensation, salary or wages and other compensation, benefits offered by the Buyer, payments required by Applicable Law, IZERP obligations and claims under Assumed Employee Plans. The Buyer shall indemnify and hold the Asset Sellers harmless from and against any and all damages which the Seller or other Asset Seller may suffer or incur in connection with such assumed liabilities and obligations.
(c) Subject to the further provisions of this Section 8.7(c), the Seller may pay and discharge all liabilities and obligations with respect to any employees up to and including the Closing Date, without deduction or setoff to the Purchase Price. The Asset Sellers shall be responsible for all liabilities and obligations with respect to any employees up to and including the Closing Date and all liabilities and obligations with respect to any employees who are not Assumed Employees, including, in both cases, liabilities and obligations related to any notice of termination, termination or severance pay (in each case whether required under Applicable Law or under contract), employment insurance, workplace safety and
insurance/workers'ompensation, salary or wages and other. compensation, benefits offered by the Seller and the other Asset Sellers, payments required by Applicable Law and claims under Employee Plans, except for (i) obligations described in Sections 2.3(a), (b) and (c) with respect to employees in the ordinary course of business fi.om the Effective Date to the Closing Date, excluding self. insured medical claims and self insured Pennsylvania worker's compensation claims based on occurrences prior to the Filing Date, and (ii) payments and entitlements under the Assumed Employee Plans after the Closing Date, each of which shall be the obligation of the Buyer. For
43
DMWEST 06961669 v29 —72
greater certainty, the Seller retains all self insured medical obligations to employees and all self insured Pennsylvania worker's compensation claims, regardless of when asserted, if the claims are based on occurrences prior to the 1 iling Date, and agrees to deal with such claims in the CCAA Proceedings and the Chapter 15 Proceedings.
(d) Effective as of the Closing Date, the Seller and the other Asset Sellers assign to the Buyer, and the Buyer assumes, the Assumed Employee Plans and all of the Seller's and other Asset Sellers'ights, obligations and liabilities under and in relation to the Assumed Employee Plans and shall be assigned and receive all assets of the Assumed Employee Plans. The Seller and the other Asset Sellers and the Buyer agree to cooperate to talce all reasonable actions to affect such assignment and to obtain any required Governmental Authorizations in respect of such assignment.
(e) To the extent that service is relevant for purposes of eligibility and vesting (and, in order to calculate the amount of any vacation, sick days, severance, layoff, and pension benefit accruals) under any Assumed Employee Plan, other than as would result in duplication of benefits, each Assumed Employee shall be credited for service earned prior to the Closing Date with the Seller or its Affiliates in addition to service earned with the Buyer on. and after the Closing Date,
(f) All provisions contained in this Agreement with respect to the Assumed Employees, the Assumed Employee Plans or compensation of Assumed Employees are included for the sole benefit of the Parties. Nothing contained herein shall (i) confer upon any former, current or future employee of'the Seller or the Buyer or any legal representative or beneficiary thereof any rights or remedies, including any right to employment or continued employment, of any nature, for any specified period, (ii) cause the employment status of any former, present or future employee of thc Buyer to be other than terminable at will or in accordance with Applicable Law, (iii) confer any third party beneficiary rights upon any Assumed Employee or any dependent or beneficiary thereof or any heirs or assigns thereof, (iv) obligate the Buyer to maintain the Assumed Employee Plans for any period of time or offer benefits of any nature to Assumed Employees following the Closing Date, or (v) limit or restrict the ability of the Buyer to make changes to Assumed Employee compensation or benefits after the Closing Date,
(g) Pursuant to Treasury Regulations Section 1.409A-1(h)(4), the Seller's and other Asset Sellers'ermination of the employment of United States employees of the Purchased Business who become Assumed Employees shall not constitute a "separation from service" within the meaning of Section 409A of the Code and the Treasury Regulations thereunder, including Treasury Regulations Section 1.409A-1(h),
(h) It is acknowledged and agreed that, subject to Section 2.4 and Section 3.2, the Seller and the other Asset Sellers may prior to Closing pay to their employees the amount due (i) in the ordinary course consistent with past practice {except for post-Filing Date payments of severance), and (ii) under the KERP {including payments due on June 30, 2012, payments relating to completion of the transactions contemplated hereby and payments relating to participants'ermination prior to or at Closing).
DMWEST ¹8961669v29 (i) The Asset Sellers shall, after consultation with the Buyer, be entitled to terminate the employment of their employees as they deem appropriate and to deal with any claim arising fi.om such termination under the CCAA Proceedings or Chapter 15 Proceedings, as applicable; provided that if any such termination results in an Assumed Liability under this Agreement, the Asset Sellers shall obtain the Buyer's approval in advance of any such termination.
8.8 Deal Protection
(a) Except as expressly provided in this Section 8.8, the Seller shall not, directly or indirectly, through any Person, and shall cause its Affiliates not to:
{i) solicit, assist, initiate, knowingly encourage or otherwise knowingly facilitate (including by way of furrushing information) any inquiries or proposals, whether publicly or otherwise, regardirrg an Acquisition Proposal, provided that, for greater certainty, the Seller niay advise any Person making an unsolicited Acquisition Proposal that such Acquisition Proposal does not constitute a Superior Proposal when the Board of Trustees has so determined;
(ii) enter into, continue or participate in any discussions or negotiations with any Person regarding an Acquisition Proposal; or
(iii) accept or enter or propose publicly to accept or enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal (other than a confidentiality agreeinent permitted by Section 8.8{c)(ii)(1)).
(b) The Seller shall promptly notify the Buyer of any Acquisition Proposal or inquiry (in each case written or oral) that is reasonably expected to lead to an Acquisition Proposal, in each case received after. the date hereof, of which any of its directors, officers or financial advisors are or become aware,
{c) Notwithstanding Sections 8.8(a) and 8.8(b) and any other provision of this Agreement, if at any time following the date of this Agreement the Board of 1rustees receives a written Acquisition Proposal that was not solicited after entering into this Agreement in breach of Section 8.8(a), the Board of Trustees may (directly or through its advisors or representatives):
(i) contact the person making such Acquisition Proposal and its Representatives to clarify the terms and conditions of such Acquisition Proposal and the likelihood of consummation so as to determine whether such proposal is, or could reasonably be expected to lead to, a Superior Proposal; and
{ii) if, in the opinion of the. Board of Trustees, acting in good faith and after receiving advice from its outside financial advisor and outside legal counsel, the Acquisition Proposal (disregarding, for the purposes of any such determination, any term of such Acquisition Proposal that provides for a due diligence investigation and/or a financing condition) is, or could reasonably be expected to lead to, a Superior Proposal, the Seller may:
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(1) furnish information with respect to the Seller and its subsidiaries to the person making such Acquisition Proposal and its representatives (pursuant to a customary form of confidentiality agreement); and/or
(2) consider such Acquisition Proposal and/or, participate and/or engage in discussions with the person making such Acquisition Proposal and its representatives;
provided that the Buyer is promptly provided with a list and copies of all information provided to such person not previously provided to the Buyer and is promptly provided with access to the information that was provided to such person.
(d) The Seller shall ensure that its officers and directors and those of its subsidiaries and any financial or other advisors or representatives retained by it are aware of the provisions of this Section 8,8, and it shall be responsible for any breach of this Section 8.8 by any such Person or its advisors or representatives.
(e) If the Seller terminates this Agreement pursuant to Section 10,1(c)(iii)or the Buyer terminates this Agreement under Sections 10.1{d)(iii)or 10.1(d)(v), concurrently with such notice of termination the Seller shall pay to the Buyer a fee in the amount of $2,250,000 {the "Break Fee") as liquidated daitiages and not as a penalty, and the Buyer shall be returned the Deposit from the escrow, and such fee and the return of such Deposit shall be the exclusive remedy of the Buyer on account of such termination.
(f) Nothing in this Section 8,8 or otherwise in this Agreement shall: require the Buyer to participate in any auction or similar. process with respect to the purchase of the Purchased Assets and the Purchased Business and the transactions contemplated by this Agreement.
8.9 Notices of Material Breach
If at any time: {a)the Buyer becomes aware of any material breach by the Seller of any representation, warranty, covenant or agreement contained herein and such breach is capable of being cured by the Se11er; or {b)the Seller becomes aware of any material breach by the Buyer of any representation, warranty, covenant or agreement contained herein and such breach is capable of being cured by the Buyer, the Party becoming aware of such breach shall promptly notify the other Party in writing of such breach.
8.10 Release
Effective as of the Closing Date, the Buyer forever releases and discharges the Seller and its Affiliates and its and their respective present and former shareholders, officers, directors, employees, auditors, advisors, legal counsel and agents {each, a "Released Party" ), from any and all demands, claims, liabilities, actions, causes of action, counterclaims, suits debts, sums of money, accounts, indebtedness, liability or obligation of whatever nature based in whole or in part on any act or omission, transaction, dealing or other occurrence existing or taking place on or prior to the Closing relating to, arising out of or in conriec!ion with, the Purchased Assets or the Purchased Business, including, for greater certainty, any and all claims, demands, 46
DMWEST 56961669 v29 complaints, actions, losses, liabilities, judgments, settlements, damages, penalties, consequential damages, exemplary damages, fines, liens, remediation, abatement, costs and expenses of investigation, remediation or cleanup in defense of or resulting from any claim, action or suit, demand or administrative proceeding or any requirement of any Governmental Authority, whether known or unknown, and whether in law or in equity, whether direct or consequential, compensatory, exemplary, liquidated or unliquidated, which the Buyer or its respective legal representatives, successors, assigns, heirs, executors or administrators has, shall have or may ever have against any Released Party with respect to any environmental condition, investigation or remediation with respect to the Real Property (owned or leased) of any Released Patty. Notwithstanding the generality of the foregoing, the foregoing release shall not release any Released Painty from its obligations under this Agreement, nor shall it expand, contract or othei wise affect in any way the Assumed Liabilities assumed at the Closing by the Buyer or the Excluded Liabilities retained by the Seller.
8.11 Title Policies and Documents
(a) To the extent not previously provided, as soon as reasonably practicable after execution of this Agreement, the Seller and/or the Asset Sellers shall provide the Buyer with (i) a complete legal description and tag parcel numbers for each parcel of Owned Real Propeity and the Huntsville Facility, (ii) for eacli parcel of Owned Real Property and the Huntsville Facility, a copy of any title policy, title commitment or any certificate of title that the Seller and/or the Asset Sellers possess, evidencing title to each parcel of Owned Real Propeity and the Huntsville Facility as of the date of the applicable certificate, commitment or policy, aixl (iii) complete and legible copies of all instruments and documents that the Seller and/or the Asset Sellers possess affecting title to the Owned Real Property and the Huntsville Facility.
(b) Promptly thereafter and based on the legal descriptions and/or tax parcel numbers provided, the Seller shall cause the Title Company to issue, at the expense of the Buyer, one or more Title Commitments for the issuance of an extended coverage owner's policy or policies of title insurance in the amount determined under Section 8.11(c),insuring as of the Closing Date the Buyer's fee simple title to the Owned Real Property and, following the exercise of the Option, the Huntsville Facility (each, a "Title Insurance Policy" ). The Seller shall cause the Title Company to delivei to the Buyer duplicate copies of the litle Commitments and Schedule B items thereto and all other documents referenced therein. In addition, within two Business Days after receipt of a written request from the Buyer, (he Sellei and/or the Asset Sellers will execute and deliver authorizations that may be sent by the Buyer to Govermnental Authorities that authorize such Governmental Authorities to reveal to the Buyer all information, if any, in any files such Govermriental Authorities have on the Owned Real Property and the Huntsville Facility, or any part thereof, Drovided such authorizations do not authorize or request inspections with respect to the Owned Real Property and the Huntsville Facility, in each case to the extent such authorizations are required of the Seller and/or the Asset Sellers. The Seller shall be responsible for the cos(s of discharging any and all financial encumbrances, including all deeds of trusts, mortgages and mechanics and materialmen's liens, on the Owned Real Property and the Huntsville Facility, including the cost to record releases or discharges, unless any of the foregoing is a Permitted Encumbrance. The Seller and the Asset Sellers agree, at their cost, to
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execute all customary affidavits, in reasonable foim, and other reasonable documents requested by the Title Company in order to obtain each Title Insurance Policy.
(c) The value of the Owned Real Property and the Huntsville Facility for Transfer Tax, documentary stamps and other relevant purposes will equal the value of each parcel as reasonably agreed upon by the Parties,
8.12 Title Review/Permitted E&ncumbrances
The Buyer shall notify the Seller in writing of any Unpermitted Encumbrance. The Seller shall have ten (10) days after notice of any Unpermitted Encumbrance is delivered by the Buyer within which the Seller shall deliver notice to the Buyer in writing as to whether the Seller elects to cure, or insure around any such matter; provided, however, that the Seller shall be required to cure any monetary Unpermitted Encumbrance (i.e., an exception which can be deleted as an exception upon the delivery of sufficient funds to the Title Company) at or prior to Closing, Except with respect to a monetary Unpermitted Encumbrance, failure to notify the Buyer in writing within such period of its election to cure or insure around shall be deemed the Seller' election not to cure or insure around. The Buyer shall have ten (10) days following receipt of the Seller's notice or deemed notice electing not to cure or insure around in which to (a) elect to waive its objection to any Unpermitted Encumbrance that the Seller does not elect to cure or insure around, (b) remove the Own'ed Real Property or Huntsville Facility subject to the Unpermitted Encumbrance fiorn the Purchased Assets, which shall result in a mutually-agreeable reduction of the Purchase Price, or (c) terminate this Agreement in accordance with Article 10, but only if the existence of the Unpermitted Encumbrance and the removal of the Owned Real Propei&y pursuant to clause (b) would result in a Material Adverse Effect if the rights, benefits or privileges under such title exception(s) are asserled or enforced. If the Buyer fails to notify the Seller in writing of the Buyer's election within such ten- (10-)day period, the Buyer shall be deemed to have elected to proceed in accordance with clause (a) of the preceding sentence.
8.13 Surveys.
To the extent not previously provided, as soon as reasonably practicable after execution of this Agreement, the Asset Sellers shall deliver to the Buyer any storeys that the Asset Sellers possess of the Owned Real Propeity and the Huntsville Facility, or any part thereof.
8.1&1 Prorations and Charges.
All Taxes and assessments relating to the Owned Real Property and the Huntsville Facility for any tax year prior to the real estate tax year in which the Closing occurs shall be paid in full by the Seller or the applicable Asset Seller on or before the Closing Date or an amount sufficient to fully discharge the same shall be deposited in escrow with the Title Company for payment to the relevant Tax authority. The Seller shall pay the premium for each Title Insurance Policy and the escrow fees at or prior to the Closing, without a reduction of the Purchase Price therefor. All other costs associated with the Closing of the transactions contemplated by this Agreement shall be paid in accordance with common escrow practices in the county in which the Owned Real Property or the Huntsville Facility is located,
DMWEST@6961669 v29 8.15 Casualty Losses
Notwithstanding any provision in this Agreement to the contrary, if, before the Closing, all or any material portion of the Purchased Assets is (a) condemned or taken by eminent domain, or (b) a material poition is damaged or destroyed by fire or other casualty, the Seller shall notify the Buyer promptly in writing of such fact, and, at the Buyer's sole discretion, (i) the Buyer may elect to terminate this Agreement, or (ii) the Buyer may elect to consummate the transactions contemplated by this Agreement without regard to such event, in which case (A) in the event of condemnation or taking, the Seller shall assign or pay, as the case may be, any proceeds thereof to the Buyer at the Closing, or (B) in the event of fire or other casualty, the Seller shall, at its option, either restore such damage or assign the insurance proceeds therefi.om to the Buyer at Closing.
8.16 Letters of Credit
The Buyer will arrange for the replacement of the Letters of Credit within two (2) months following the Closing Date. If any Letter of Credit is drawn after the Closing Date and before being replaced, the Buyer shall be liable to the issuer of such Letter of Credit for the amount so drawn. The Buyer will cause to 4e paid to the Seller any cash collateral received in connection with the replacement of the Letters of Credit. The Buyer will provide to the issuer of each Letter of Credit not less than five (5) Business Days prior to the Closing "lciiow your customer" and other similar information regarding the Buyer as may be reasonably requested by each issuer of a Letter of Credit to comply with applicable law or customary procedures of the applicable issuer,
8.17 European Business Closing
The closing of'he acquisition of the European Business by the Buyer and/or its nominees pursuant to the Offer shall occur no sooner than December 17, 2012.
ARTICLE 9.—COURT ORBERS; DESIGNATION RIGHTS
9,1 Court Orders'a)
As promptly as practicable after execution of this Agreement the Seller shall: (i) bring an application for the issuance of the Initial CCAA Order with the Canadian Couit; (ii) file a motion for the issuance of the Approval and Vesting Order; (iii) file a motion for entry of the Provisional Relief Order and the CCAA Recognition Order with the Bankruptcy Couit; (iv) file a motion for entry of the Sale Recognition Order; and (v) serve such parties as the CCAA, the Canadian Court, the Bankruptcy Code, the Banlciuptcy Coiut, and the Buyer may require for applications and motions seeking issuance or entry of each of the Couit Orclers. In connection with the foregoing, the Buyer shall, in consultation with the Seller, determine which liabilities are to be compromised or extinguished under the Couit Orders,
(b) The Buyer shall cooperate with the Seller acting reasonably, as may be necessary, in obtaining the Court Orders prior to any applicable dates set forth in Section 10.1.
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(c) Notice of the application and motions seeking the issuance and entry of the Coute Orders shall be served by the Seller on all Persons required to receive notice under applicable laws and the requirements of the CCAA, the Canadian Court, the Bankruptcy Code, the Bankruptcy Court and any other Person determined necessary by the Seller or the Buyer.
(d) In the event leave to appeal is sought, an appeal is taken or a stay pending appeal is requested with respect to any of the Court Orders, the Seller shall promptly notify the Buyer of such leave to appeal, appeal or stay request and shall promptly provide to the Buyer a copy of the related notice(s) or Order{s). The Seller shall also provide the Buyer with copies of any motion or application filed in connection with any leave to appeal or appeal from such Orders within two (2) Business Days after receipt thereof by the Seller.
{e) From and after the date hereof, the Seller shall not take any action that is intended to result in, or fail to tal&e any action the intent of which failure to act would result in, the reversal, voiding, modification or staying of any of the Court Orders.
(f) From and after the date hereof, the Seller shall provide such prior. notice as may be reasonable under the circumstances before filing any materials with the Canadian Court or the Bankruptcy Court that relate, in whole or in pait, to this Agreement or the Buyer and shall consult in good faith with the Buyer regarding the content of such materials prior to any such filing,
9.2 Designation Rights
(a) The Approval and Vesting Order and Sale Recognition Ordei.;-or, other orders obtained by from the Canadian Court and the Bankruptcy Court, shall provide for the assumption by the Seller, and the assignment to the Buyer, pursuant to Section 11.3of the CCAA and Section 365 of the Bankruptcy Code, as applicable, of those Assumed Contracts, Real Propeity Leases, Personal Property Leases and Assumed Employee Plans designated by the Buyer for assumption and assignment on the terms and conditions set forth in the remainder of this Section 9.2.
(b) On or'before July 6, 2012, the Seller shall provide notice to the counterparties (except any Material Customers with respect to which consent is required pursuant to Section 7.2(g)) to executory leases and other contracts related to the Purchased Assets (without regard to whether the Buyer has designated such for assumption and assignment) that such executory leases and contracts may be assumed and assigned to the Buyer, Any notice provided to such contracting parties shall be in a form acceptable to the Buyer, acting reasonably. The Buyer shall, by July 15, 2012 (the "Initial Designation Date"), identify the Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans, in each case including the name and address of the counterparty, that the Buyer has determined up to that point that it intends to have assumed and assigned to the Buyer on the Closing Date by providing a list thereof to the Seller. The Buyer shall be allowed to designate any additional Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans, as to which notice was given to the applicable counterparty pursuant to this Section 9.2(b), for assumption and assignment, or remove any Assumed Contracts, Real Property Leases, Personal Property
50
DMWEST 08961669 v29 Leases and Assumed Employee Plans from the designation for assumption and assignment at the Closing at any time before or at the Closing.
(c) The Seller will deliver to the Buyer as soon as practicable a schedule containing a reasonable estimate of the aniounts that will be required to remedy all Monetary Defaults with respect to any contract identified to the Seller by the Buyer. The Seller shall reasonably cooperate with and provide additional information to the Buyer identifying as promptly as reasonably practicable all Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans that may be subject to assumption and assignment or rejection pursuant to Section 11.3of the CCAA and Section 365 of the Banl&ruptcy Code, as applicable,
(d) Prior to the Closing Date, the Seller shall not permit any executory lease or other contract related to the Purchased Assets to be rejected pursuant to Section 11,3of the CCAA or Section 365 of the Bankruptcy Code, as applicable, without the prior written consent of Buyer. From and after the Closing Date, the Buyer may, in its sole discretion, designate any Assumed Contracts, Real Propeity Leases, Personal Property Leases or Assumed Employee Plans not assigned to the Buyer on the Closing Date (each, an "Open Contract" ) for assumption and assignment to the Buyer; provided, that the Asset Sellers may, on not fewer than ten (10) Business Days'rior written notice to the Buyer designating the Applicable Open Contract(s) (each such notice, a "Rejection Notice"), cause to be rejected any Open Contract set forth in the Rejection Notice, subject to [he right of the Buyer, upon receipt of the Rejection Notice and prior to the rejection of the applicable Open Contract, to either (i) designate such Open Contract for assumption and assignment in accordance with the procedures set forth in Section 9.2{j),with such changes therein as are iequired by the Canadian Court or the Banl&ruptcy Couit, as applicable, or (ii) agree in writing to reimburse the applicable Asset Seller 'for the out of pocket expenses incurred under such Open Contract from and after the date of the Rejection Notice until the date on which the Buyer provides the Asset Seller with notice of the Buyer's decision as to whether to assume such Open Contract or permit its rejection, in which case the applicable Asset Seller shall refrain fi'om rejecting such Open Contract until the date it receives notification of such decision by the Buyer. The Asset Sellers shall act reasonably and in good faith in providing any Rejection Notices, including with respect to the quantity of Open Contracts set forth therein, and shall cooperate with the Buyer in determining whether or not to assume any Open Contract. The Buyei shall endeavor in good faith to complete the assumption and assignment or rejection process for all Open Contracts by September 15, 2012.
(e) In the event that the Buyer shall determine in accordance with this Section 9,2 to reject or refuse assigriment of any Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans, the Buyer shall have no obligations with respect thereto, including any obligation to cure any defaults thereundei,
(f) With respect to each of the Assumed Contracts, Real Property Leases, Personal Propeity Leases and Assumed Employee Plans designated by the Buyer for assumption and assignment, subject to Court Approval (or such other order of the Canadian Court and Bankruptcy Court and/or the consent of the applicable counterparties to the extent necessary to effect the assignment thereof), the Seller shall assume and assign to Buyer and Buyer shall
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assume all designated Assumed Contracts, Real Property Leases, Personal Pioperty Leases or Assumed Employee Plans.
(g) The Seller shall use its commercially reasonable effoits to establish the amount necessary to cure all Monetary Defaults under all Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans that the Buyer has designated for assumption and assignment, To the extent that any counterparty objects to the proposed cure amount or to the assumption or assignment of any such agreement on any other grounds (each, an "Objecting Cnvnterparty"), the Seller shall reasonably cooperate with the Buyer to negotiate with such Objecting Counterparty, including attending meetings and conferences with such Objecting Counterparty and its representatives as the Buyer reasonably requests and providing the Buyer with reasonable access to the books and records of the Seller to defend the proposed assignment and assumption and cure amount, Under no circumstances shall the Seller, without the prior written consent of the Buyer, (i) compromise or commence any action with respect to a negotiated cure amount required to be made under the CCAA and Bankruptcy Code to effectuate the assumption or assignment, (ii) agree to any other amendments, supplements, or modifications of, or waivers with respect to, any of the Assumed Contracts, Real Property I.eases, Personal Property Leases and Assumed Employee Plans that the Buyer has designated for assumption and assignment, or (iii) take any action (or fail to take any action) to reject, repudiate or disclaim any of the Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Eniployee Plans that the Buyer has designated for assumption and assignment.
(h) Any of the Assumed Contracts, Real Property Leases, Personal Property Leases and Assumed Employee Plans that are not assumed by Buyer on the terms set forth in this Section 9.2 shall be an Excluded Asset.
I (i) The Olyphant Facility is owned by Cinram Manufacturing LLC and is an Excluded Asset, while all of the machinery, equipment, Inventories, Accounts Receivable, Prepaid Expenses, Assumed Contracts, Permits, Intellectual Property and other assets owned or used or held for use by Cinram Manufacturing LLC in connection with the Olyphant Facility are Purchased Assets, subject in the case of the Assumed Contracts to the rejection rights set forth in this Section 9.2, including this Section 9.2(i). Following the Closing Date, the Buyer will operate the Olyphant Facility, using the Purchased Assets relating thereto, pursuant to the terms of the Transition Services Agreement, Notwithstanding the prior provisions of this Section 9,2, the Seller shall take all reasonable steps within the CCAA Proceedings and the Chapter 15 Proceedings to allow the Buyer to assume any contract identified by the Buyer relating to the Olyphant Facility for assumption and assignment (each, an "Oly phant Contract" ) in accordance with the procedures set foith in Section 9.20), with such changes therein as are required by the Canadian Court or the Bankruptcy Couit, as applicable.
(j) Within tive (3) Business Days of receipt of the Buyer's notification of the designation of an Open Contract or an Olyphant Contract for assumption and assignment, the Seller shall provide notice of the designation to the counterparty to such designated Open Coritract or Olyphant Contract and the proposed amount that will be required to remedy a Monetary Default that may be necessary for the assumption and assignment of the same in a ! 52
DMWEST 08961669 v29 foim acceptable to the Buyer and approved by the Canadian Court or the Banlavptcy Couit in a Court Order.
ARTICLE 10.—TERMINATION
10.1 Termination
This Agreement may be terminated at any time prior to Closing, subject to any approvals required from the Canadian Couit or the Baiihxptcy Coute in connection with the CCAA Proceedings or the Chapter 15 Proceedings, as follows:
(a) by mutual written consent of the Seller and the Buyer;
(b) by either party upon written notice to the other, if".
(i) the Closing has not occurred on or before September 15, 2012 or such later date agreed to by both the Seller and the Buyer in writing (the "Sunset Bate'*), provided that such right slmll not be available to any Party whose breach hereof has been the principal cause of, or has directly resulted in, the event or condition purpoitedly giving rise to the right to terminate this Agreement pursuant to this clause;
(ii) any condition set forth in Section 7.1 is not satisfied, or such condition is incapable of being satisfied, by the Sunset Date, unless the Pai@ seel&ing termination is in material breach of its obligations under this Agreement;
(iii) a Governmental Authority issues an Order prohibiting the transactions contemplated hereby, which Order shall have become final and non-appealable; or
(iv) the CCAA Proceedings or Chapter 15 Proceedings are dismissed and such dismissal does not expressly contemplate and provide for consummation of the transactions provided for in this Agreement;
(c) by the Seller, upon written notice to the Buyer, if;
(i) the CCAA Proceedings or Chapter 15 Proceedings are terminated or dismissed, unless such termination or dismissal was advocated by the Seller in breach of this Agreement;
(ii) any condition set foith in Section. "/.3 is not satisfied, or such condition is incapable of being satisfied, by the Sunset Date, unless the Seller is in material breach of its obligations under this Agreement;
(iii) such termination is for the purpose of entering into a binding written agreement with respect to a Superior Proposal (other than a confidentiality agreement permitted by Section 8.8(c)), subject to compliance with Section 8.8; or
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(iv) the Seller has determined to reject the Offer due to a failure of the condition precedent to the consummation of the acquisition of the European Business set forth in Section 6(f) of the Offer; and
(d) by the Buyer, upon written notice to the Seller:
{i) if any condition set foith in Section 7.2 is not satisfied, or such condition is incapable of being satisfied, by the Sunset Date, unless the Buyer is in material breach of its obligations under the Agreement;
(ii) as provided in Section 8.12 and Section 8.15;
(iii) if the Seller withdraws or seeks authority to withdraw the Approval and Vesting Order or the Sale Recognition Order;
{iv) if there are any Uncaptured Accruals with respect to which the Seller has not agreed that there will be a reduction of the Purchase Price on a dollar-for-dollar basis; or
(v) if the Seller sells, transfers or otherwise disposes, directly or indirectly, of any material portion of the Purchased Assets, except in connection with the CCAA Proceedings and/or the Chapter 15 Proceedings', and except with the consent of the Buyer.
102 Effect of Termination
If this Agreement is terminated by the Seller under Section 10.1(b)(ii) or Section 10,1(c)(ii) based on a material breach being committed by the Buyei and the Buyer is unable to timely cure such breach, the Seller shall be entitled to the full amount of the Deposit and all interest accrued thereon as liquidated damages and not as a penalty and as its sole and exclusive remedy against the Buyer. If this Agreement is terminated by the Buyer under Section 10.1(d){iii)or Section 10,1(d)(v), or if this Agreement is terminated by the Buyer under Section 10,1(b)(ii) or Section 10.1(d)(i) based on a material breach being committed by the Seller and the Seller is unable to timely cure such breach (excluding, for clarity, the non-fulfillment of a condition dependent on the action or inaction of a third party, including the Canadian Court, the Bankruptcy Court, applicable regulatory authorities and/or Material Customers or counterparties to Material Contracts, where the Seller is not in material breach of its covenants hereunder or where the failure of the condition to be fulfilled is not a result of any material breach by the Seller of its covenants hereunder), then the Seller shall pay to the Buyer the Break Fee, as liquidated damages and not as a penalty, as the Buyer's sole and exclusive remedy against the Seller,
ARTICLE 11. —CLOSING
11.1 Location and Time of the Closing; Effective Time
The Closing shall talce place on the Closing Date at the Toronto, Ontaiio offices of Goodmans LLP, 333 Bay Street, Suite 3400, Toronto, Ontario MSH 2S7, or at such other location as may be agreed upon by the Parties hereto, Notwithstanding the foregoing, the
DMWEST S6961669 V29 transfer of the Owned Real Propeity, including the Huntsville Facility if the Buyer requires the exercise of the Option, in connection with the Closing shall take place through a traditional real estate escrow with a title company mutually selected by the Parties (the "Title Company" ). While legal title to the Purchased Assets and the Purchased Business will transfer to the Buyer on the Closing Date, the transactions contemplated by this Agreement shall be effective as of the Effective Date. The Buyer shall be entitled to the benefit of all revenues and profits of the Purchased Business as of the Effective Date, and shall bear the responsibility of all expenses and losses of the Purchased Business as of the Effective Date,
11.2 Closing Deliveries
(a) At the Closing, the Seller shall deliver to the Buyer:
(i) the documents required to be delivered by the Seller pursuant to Section 7.2;
(ii) a receipt for the Purchase Price for the Purchased Business;
(iii) certified copies of each of the Court Orders;
{iv) all certificates, deeds, bills of sale, endorsements, assignments and other instruments of transfer and conveyance as may be required to transfer the Purchased Assets to the Buyer, each in a form reasonably satisfactory to the Buyer;
(v) {A)certificates of recent date as to the good standing of the Seller and the Additional Sellers from their jurisdictions of organization, as applicable, and {B)to the extent obtainable, certificates as to the payment of all applicable Taxes by the Seller and the Additional Sellers, executed by the appropriate Governmental Authorities where they are organized and conduct business;
(vi) evidence reasonably satisfactory to the Buyer of the termination of {A)the Madison Purchase Right, (B) the other agreements identified by the Buyer 1o the Seller prior to the date hereof in a writing that references this section;
(vii) if the Buyer requires that the Option be exercised, evidence reasonably satisfactory to the Buyer that the Option was duly exercised so that the Buyer or its nominee acquires fee title to the Huntsville Facility at the Closing;
(viii) a counterpart to the Escrow Agreement and the Transition Services Agreement;
(ix) an affidavit in customary form from each Asset Seller that owns Real Property with respect to compliance with the Foreign Investment in Real Property Act {Code Section 1445, as amended, and the regulations issued thereunder);
(x) a purchase certificate issued by the Workplace Safety and Insurance Botird; and
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(xi) any other documents reasonably requested by the Buyer in order to effect, or evidence the consummation of, the transactions contemplated herein or otherwise provided for under this Agreement.
(b) At the Closing, the Buyer shall deliver to the Seller:
(i) an instrument of assumption of liabilities with respect to the Assumed Liabilities in a form satisfactory to the Seller, acting reasonably;
(ii) a duly executed election pursuant to GST Legislation and any certificates, elections or other documents required to be delivered pursuant to Section 8.6(d);
(iii) the documents required to be delivered by the Buyer pursuant to Section 7.3;
(iv) the Purchase Price for the Purchased Business, by wire transfer of immediately available funds to an account designated by the Seller prior to Closing;
(v) if the Buyer requires that the Option be exercised, all documents required to exercise the Option so that the Buyer or its nominee acquires fee title to the Huntsville I'acility at the Closing;
(vi) a counterpait to the Escrow Agreement and the Transition Services Agreement;
(vii) an agreement between the Buyer and each issuer of the Letters of Credit wherein the Buyer assumes the reimbursement obligations in respect thereof as contemplated by Section 8.16;and
(viii) any other documents reasonably requested by the Seller in order to effect, or evidence the consummation of, the transactions contemplated herein or otherwise provided for under this Agreement.
ARTICLE 12. —GENERAL MATTERS
12,1 Dissolution of Seller; Name Changes
(a) The Buyer acknowledges and agrees that nothing in this Agreement shall operate to prohibit or diminish in iuiy way the right of any of the Seller or any of its Affiliates to dissolve, wind up or otherwise cease operations in any manner or at any time subsequent to the Closing Date as they may deterniine in their sole discretion, subject to their satisfaction of their obligations under this Agreement.
(b) Promptly following tlie Closing, the Seller and its North American Affiliates shall cause their corporate names to be changed to names that do not include the word "Cinram", if they have not done so prior to the Closing; provided, however, that the name of Cinram Wireless LLC shall not be required to be changecl until the termination of its key customer contract,
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DMWEST 08961669 V29 following which its name shall promptly be changed to a name that does not include the word "Cinrain".
12.2 Confidentiality
Without limiting the provisions of the Confidentiality Agreement, until the transaction contemplated by this Agreement is completed, the Buyer shall not, except as contemplated below, directly or indirectly, use for its own purposes or communicate to any other Person any Confidential Information relating to the Seller or to the Purchased Assets or the Business (including with respect to employees, customers and suppliers) which become known to the Buyer, its accountants', legal advisers or representatives as a result of the Seller making the same available in connection with the transactions contemplated hereby. The foregoing shall not prevent the Buyer from disclosing or making available to its accountants, professional advisers and bankers and other lenders, whether cin.rent or prospective, any such Confidential Information for use solely in connection with completing the transactions contemplated hereby.
12.3 Pubhc Notices
No press release or other announcement concerning the transactions contemplated hereby shall be made by the Seller or by tlie Buyer without the prior consent of the other Paity (such consent not to be unreasonably withheld) provided, however, that subject to the last sentence of this Section 12.3, any Party may, without such consent, make such disclosure if the same is required by Applicable Law (including disclosure required in connection with the CCAA Proceedings or the Chapter 15 Proceedings) or by any stock exchange on which any of the securities of such Party or. any of its Affiliates are listed or by any insolvency or other court or. securities commission or other similar GovermTiental Authority having jurisdiction over such Party or any of its Affiliates, and, if such disclosure is required, the Party making such disclosure shall use commercially reasonable efforts to give prior oral or written notice to the other, and if such prior notice is not possible, to give such notice immediately following the making of such disclosure. Notwithstanding the foregoing'(a) this Agreement may be filed by the Seller with the Canadian Court and/or the Bankruptcy Court; and (b) the transactions contemplated in this Agreement may be disclosed by the Seller to the Canadian Court and/or the Bankruptcy Couit, subject to redacting confidential or sensitive information as permitted by Applicable Law and rules. The Parties further agree that:
(a) thc Monitor and/or 1 oreign Representative may prepare and file reports and other documents with the Canadian Court and/or the Banl&ruptcy Couit, as applicable, containing references to the transactions contemplated by this Agreement and the terms of such transactions; and
(b) the Seller and its professional advisors may prepare and file such reports and other documents with the Canadian Court and/or the Bankruptcy Court containing references to thc transactions contemplated by this Agreement and the terms of such transactions as may reasonably be necessary to complete the transactions contemplated by this Agreement or to comply with their obligations to the Canadian Court and the Bankruptcy Couit.
't
57
DMWEST 48961669 v29 86
Wherever possible, the Buyer shall be afforded an opportunity to review and comment on such materials prior to their filing. The Parties shall issue a joint press release announcing the execution and delivery of this Agreement, in form and substance mutually agreed to by them.
12.4 Sun ival
The representations and warranties of the Seller in this Agreement or in any agreement, document or ceitificate delivered pursuant to or. in connection with this Agreement or the transactions contemplated hereby (the "Seller's Representations" ) are set forth solely for the purpose of Section 7.2(a) and none of them shall survive the Closing, Except as provided in Section 10.2,the Seller shall not have any liability, whether before or after the Closing, for any breach of the Seller's Representations, and the Buyer acl&nowledges tha! its exclusive remedy for any such breach shall be termination of this Agreement prior to the Closing (but only if permitted by Section 10,1) and the fees set forth in Section 10.2.
12.5 Expenses
Except as otherwise specifically provided herein, the Seller and the Buyer shall be responsible for the expenses (including fees and expenses of legal advisers, accountants and other professional advisers) incurpd by them, respectively, in connection with the negotiation and settlement of this Agreement and the completion of the transactions contemplated hereby.
12.6 Non-Recourse
No past, present or future director, officer, manager, member, emplo'yce, incorporator., member, partner, stockholder, Affiliate, agent, attorney or representative of the respective Parties hereto, in such capacity, shall have any liability for any oMigations or liabilities of the Buyer or the Seller, as applicable, under this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.
12.7 Assignment; Binding Effect
No Party may'assign its rights or benefits under this Agreement without the consent of the other Party hereto; provided that the Buyer may without the consent of the Seller nominate one or more Canadian entities to take title to the Canadian Purchased Assets at the Closing, and one or more United States entities to tal&e title to the United States Purchased Assets at the Closing. This Agreement shall be binding upon and inure to the benefit of the ParI ies and their respective permitted successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third Person beneficiary rights in any Person or entity not a Party to this Agreement. A nominee of the Buyer pursuant to tins Section 12.7 shall be subject!o the last sentence of Section 9 of the Offer on the same basis as the Buyer.
12,8 Notices
Any notice, request, demand or other communication required or permitted to be given to a Party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed given under this Agreement on the earliest of'. (a) the date of personal delivery; (b) thc 58
DMWEST 08961669 v29 date of transmission by facsimile, with confirmed transmission and receipt (if sent during normal business hours of the recipient, if not, then on the next Business Day); (c) two (2) days after deposit with a nationally-recognized courier or overnight service such as Federal Express; or (d) five (5) days after mailing via certified mail, return receipt requested. All notices not delivered personally or by facsimile will be sent with postage and other charges prepaid and properly addressed to the Party to be notified at the address set forth for such Party:
(a) If to the Buyer at: Cinram Acquisition, Inc. 2525 East Camelback Road, Suite 850 Phoenix, Arizona 85016 Attention: Jahm Najafi Telephone: (602) 476-0600 Facsimile: (602) 476-0625
with copies (which shall not in itself Ballard Spahr LLP constitute notice) to; One East Washington Street, Suite 2300 Phoenix, Arizona 85016 Attention: Karen McConnell Telephone: (602) 798-5403 Facsimile: (602) 798-5595
Davies Ward Phillips 8c Vineberg LLP 44th Floor 1 First Canadian Place Toronto, Ontario M5X 1B1 Attention; Richard Elliott Telephone: (416) 863-5506 Facsimile: (416) 863-0871
(b) If to the Seller at; Cinram International Inc. 2255 Markham Road, Scarborough, ON Ml B 2W3 Attention: Steve Brown Telephone: 416-298-8190 Facsimile: 416-332-2403
with copies (which shall Goodmans LLP not in itself constitute 333 Bay Street, Suite 3400 notice) to: Toronto, ON, M5H 2S7 Attention: Robert Chadwick/ Neill May/ Melaney Wagner Telephone: (416) 979-2211 Facsimile: (416) 979-1234
59
OMWEST 48961669 v29 88
And to: Shearman 8r. Sterling LLP 599 Lexington Avenue New York, New York 10022 Attention: Douglas P. Bartner/ Jill K. Frizzley Telephone: (212) 848-4000 Facsimile: (646) 848-8174
Any Party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to such Party at its changed address.
12.9 Counterparts; Facsimile Signatures
This Agreement may be signed in counterparts and each of such counterparts shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument. The signature of any of the Parties hereto may be evidenced by a facsimile, scanned email or internet transmission copy of this Agreement bearing such signature.
['rhe remainder of this page left intentionally blank]
60
DIVIWEST S8961669 v29 IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the date first written above. SELLER: CINRAM I RNATIONAL l~.
Per S~PUJXÃii~~ N e: John H. Bell /itic: gbief Financial OAicar
BUYER:
CINRAM ACQUISITION, INC.
Pcr:
Name:
Title;
(Asset Purchase Agreemeut) 90
IN %ITNESS WHEREOF& the Parties hereto have executed this Agreement as of the date first written above. SELLER:
CINRAM INTERNATIONAL INC.
Per:
Name:
Title:
SUVE&R:
CINRAi8 ACQUISm&D&N, INC.
(Asset Bsrehase Agreement)
This is Exhibit "B"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of August, 2012.
A Comm/sinner for TRdng Affidavits
JONATHAN ROSS EDGE, a commissioner, etc., Province ot Ontario, white a Student-at-Law, Expires Mair ti, RQ1tt. —92
Court File No. CV12-9767-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE MR. THURSDAY, THE 12
JUSTICE MORA WETZ DAY OF JULY, 2012
IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, AS AMENDED -"j;ouRR~. ND IN THK MATTER OF A PLAN OF COMPROMISE OR RRANGEMENT OF. CINgAM,, INTERNATIONAL INC., NRAM INTERNATIONAL .INCQMK FUND, CII TRUST X D COMPANIES LIS~TED 'IN'SCHEDULE "A"
Applicants '-»8'»»~»» +~ APPROVAL AND VESTING ORDER
THIS MOTION, made by Cinram International Inc. ("CII"), Cinram International Income Fund ("Cinram Fund" ), CII Trust and the companies listed in Schedule "A" hereto (collectively, the "Applicants" ) for an order:
(i) approving the sale of substantially all of the property and assets-used in connection with the business carried on by Cinram Fund and its direct and indirect subsidiaries
(collectively, "Cinram") in North America contemplated by an asset purchase agreement (the "Asset Purchase Agreement" ) between CII and Cinram Acquisition, Inc. (the "Purchaser" ) dated June 22, 2012, and appended to the affidavit of Mark Hootnick sworn June 23, 2012 (the "Hootnick Affidavit" ) as Exhibit "A";
(ii) approving the sale of the shares of Cooperatie Cinram Netherlands UA (the "Purchased Shares" ) pursuant to the binding purchase offer dated June 22, 2012 (the "Purchase Offer") provided by the Purchaser to CII and 1362806 Ontario Limited (together with Cll, the "Share SeIlers") appended to the Hootnick Affidavit as Exhibit c(B'!) 7
(iii) authorizing CII to enter into the Asset Purchase Agreement and the Share Sellers to enter into the Purchase Offer;
(iv) authorizing CII, Cinram Inc., Cinram Retail Services LLC, One K Studios, LLC, Cinram Distribution LLC and Cinram Manufacturing LLC (collectively, the "Asset Sellers", together with the Share Sellers, the "Sellers") to complete the transactions contemplated by the Asset Purchase Agreement (the "Asset Sale Transaction" );
(v) authorizing the Share Sellers to complete the transactions contemplated by the Purchase Offer (the "Share Sale Transaction", together with the Asset Sale Transaction, the "Sale Transaction" ), iqcluding, without limitation, entering into a share purchase agreement in the form attached as Exhibit A to the Purchase Offer (the "Shai.e Purchase Agreement" ) upon due exercise of the Purchase Offer; and
(vi) upon delivery of Monitor's Certificates (as defined below) by the Monitor (as defined below) to the Purchaser, vesting all of the Asset Sellers'ight, title and interest in and to the Purchased Assets (as defined in the Asset Purchase Agreement) and the Share Sellers'ight, title and interest in and to the Purchased Shares in the Purchaser oi it: nominees, free and clear of all interests, liens, charges and encumbrances, other than permitted encumbrances, as set out in the Approval and Vesting Order, was heard this day at 330 University Avenue, Toronto, Ontario.
ON READING the affidavit of John Bell sworn June 23, 2012, (the "Bell Affidavit" ), the Hootnick Affidavit, the First Report of FTI Consulting Canada Inc. in its capacity as Court- appointed Monitor (the "Monitor" ) dated July 9, 2012 (the "Monitor's Report" ), and on hearing the submissions of counsel for the Applicants, the Monitor, the Purchaser, the
Administrative Agent under the Credit Agreements (as defined in the Bell Affidavit) and the DIP
Agent under the DIP Credit Agreement (each as defined in the Bell Affidavit), no one appearing 1 and making submissions for any other person served with the Motion Record, although properly served as appears fmm the affidavit of Caroline Descours sworn June 27, 2012, filed: —94
1. THIS COURT ORDERS that the time for service of the Notice of Motion and the Motion
Record is hereby abridged and validated so that this Motion is properly returnable today and hereby dispenses with f'urther service thereof.
2. THIS COURT ORDERS AND DECLARES that the Asset Sale Transaction is hereby
approved, and the execution of the Asset Purchase Agreement by CII is hereby authorized and
approved, with such minor amendments as CII may deem necessary with the approval of the Monitor. The Asset Sellers are hereby authorized and directed to take such additional steps and
execute such additional documents as may be necessary or desirable for the completion of the Asset Sale Transaction and for the conveyance of the Purchased Assets to the Purchaser and/or one or more entities nominated by the Purchaser to take title to the Purchased Assets in accordance with the Asset Purchase Agi cement (each an "Asset Purchaser Nominee" ).
3. THIS COURT ORDERS AND DECLARES that the Share Sale Transaction is hereby
approved, and the Share Sellers are hereby authorized to execute the Purchase Offer, with such minor amendments as the Share Sellers may deem necessary with the approval of the Monitor. The Share Sellers are hereby authorized and directed to take such additi6'nal steps and execute such additional documents, including, without limitation, the Share Purchase Agreement, as may be necessary or desirable for the completion of the Share Sale Transaction and for the conveyance of the Purchased Shares to the Purchaser or an entity nominated by the Purchaser to take title to the Purchased Shares (the "Share Purchaser Nominee" ).
4. THIS COURT ORDERS AND DECLARES that upon the delivery of a Monitor's certificate to the Purchaser substantially in the form attached as Schedule "B" hereto (the "Monitor's Asset Sale Transaction Certificate" ), all of the Asset Sellers'ight, title and interest in and to the Purchased Assets shall vest absolutely in the Purchaser and/or the Asset
Purchaser Nominee, free and clear of and from any and all security interests (whether contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or monetary claims, whether or not they have attached or been perfected, registered or filed and whether secured, unsecured or otherwise (collectively, the "Claims" ) including, without limiting the generality of the foregoing: (i) any encumbrances or charges created by the Order of the Honourable Justice Morawetz dated June 25, 2012; (ii) all charges, security interests or claims evidenced by registrations pursuant to the Personal Property Security Act (Ontario) (the
"PPSA") or any other personal property registry system; and (iii) those Claims listed on
Schedule "D" hereto (all of which are collectively referred to as the "Encumbrances", which
Claims and Fncumbrances shall not include the Permitted Encumbrances (as defined in the Asset
Purchase Agreement), which Permitted Encumbrances include the encumbrances, easements and
restrictive covenants listed on Schedule "E")and, for greater certainty, this Court orders that all
of the Encumbrances affecting or relating to the Purchased Assets are hereby expunged and discharged as against the Purchased Assets.
5. THIS COURT ORDERS that with respect to the U.S. Applicants (as defined in the Bell Affidavit) only, this Order is subject to the issuance of an order by the United States Bankruptcy
Court for the District of Delaware authorizing the sale and transfer of the Purchased Assets that
are located within the territorial jurisdiction of the United States, fice and clear of and from any Claims and Encumbrances.
6. THIS COURT ORDERS AND DECLARES that upon the delivery of a Monitor's certificate to the Purchaser substantially in the form attached as Schedule "F" hereto (the "Monitor's Share Sale Transaction Certificate", together with the Monitor's Asset Sale Transaction Certificate, the "Monitor's Certificates" ), all of the Share Sellers'ight, title and interest in and to the Purchased Shares shall vest absolutely in the Purchaser or the Sha ",
Purchaser Nominee, free and clear of and from any and all Claims and Encumbrances, and, fot greater certainty, this Court orders that all of the Encumbrances affecting or relating to the Purchased Shares are hereby expunged and discharged as against the Purchased Shares,
7. THIS COURT ORDERS that upon the registration in the Land Titles Division of the Toronto Registry Office an Application for Vesting Order in the form prescribed by the Land Titles Act (Ontario) and the Land Registration Reform Act (Ontario) with respect to the real property identified in Schedule "C"hereto (the "Real Property" ), the Land Registrar is hereby directed to enter the Purchaser or the Asset Purchaser Nominee as the owner of the Real Property in fee simple, and is hereby directed to delete and expunge from title to the Real Property all of the Clhims listed in Schedule "D"hereto. —96
8. THIS COURT ORDERS that for the purposes of determining the nature and priority of Claims, the net proceeds from the sale of the Purchased Assets shall be paid to the Monitor and
shall stand in the place and stead of the Purchased Assets, and that from and after the delivery of the Monitor's Asset Sale Transaction Certificate all Claims and Encumbrances relating to the
Purchased Assets shall attach to the net proceeds from the sale of the Purchased Assets with the same priority as they had with respect to the Purchased Assets immediately prior to the sale, as if the Purchased Assets had not been sold and remained in the possession or control of the person
having that possession or control immediately prior to the sale.
9. THIS COURT ORDERS that for the purposes of deterinining the nature and priority of Claims, the net proceeds from the sale of the Purchased Shares shall be paid to the Monitor and
shall stand in the place and stead of the Purchased Shares, and that fiom and after the delivery of
the Monitor's Share Sale Transaction Certificate all Claims and Encumbrances relating to the Purchased Shares shall attach to tile net proceeds fi.om the sale of the Purchased Shares with the same priority as they had with respect to the Purchased Shares immediately prior to the sale, as if the Purchased Shares had not been sold and remained in the possession or control of the person
having that possession or control immediately prior to the sale.
10. THIS COURT ORDERS that the Monitor may rely on written notice from the Sellers and the Purchaser regarding fulfillment of conditions to closing under the Asset Purchase Agreement, the Purchase Offer and the Share Purchase Agreement and shall incur no liability with respect to delivery of the Monitor's Asset Sale Transaction Certificate and the Monitor's Share Sale Transaction Certificate.
11. THIS COURT ORDERS AND DIRECTS the Monitor to file with the Couit a copy of the Monitor's Asset Sale Transaction Certificate and a copy of the Monitor's Share Sale Transaction Certificate, forthwith aAer delivery thereof.
12. THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal Infnrmation Protection and Electronic Documents Act, the Sellers are authorized and permitted
to disclose and transfer to the Purchaser all human resources and payroll information in the Sellers'ecords pertaining to the Sellers'ast and current employees, including personal information of those employees listed on Schedule 8.7(a) to the Asset Purchase Agreement. The -6-
Purchaser shall maintain and protect the privacy of such information and shall be entitled to use the personal information provided to it in a manner which is in all material respects identical to the prior use of such information by the Sellers.
13. THIS COURT ORDERS that, notwithstanding:
(a) the pendency of these proceedings;
(b) any applications for a bankruptcy order now or hereaAer issued pursuant to the Bankruptcy and Insolvency Act (Canada) in respect of the Applicants or Cinram International Limited Partnership (together with the Applicants, the "CCAA
Parties" ) and any bankruptcy order issued pursuant to any such applications; and
(c) any assignment in bankruptcy made in respect of the CCAA Parties; the vesting of the Purchased Assets in the Purchaser and/or the Asset Purchaser Nominee and the
Purchased Shares in the Purchaser or the Share Purchaser Nominee pursuant to this Order shall be binding on any trustee in bankruptcy that may be appointed in respect of the CCAA Parties and shall not be void or voidable by creditors of the CCAA Parties, nor shall it constitute nor be deemed to be a settlement, fraudulent preference, assiginnent, fraudulent conveyance, transfer at undervalue, or other reviewable transaction under the Bankruptcy and Insolvency Act (Canad~.',, or any other applicable federal or provincial legislation, nor shall it constitute oppressive;,r unfairly prejudicial conduct pursuant to any applicable federal or provincial legislation.
14. THIS COURT ORDERS AND DECLARES that the Sale Transaction is exempt from the application of the BuLk Sales Act (Ontario),
15. THIS COURT ORDERS that the confidential information relating to the Sale Transaction and Schedules 2.1(i),4.3 and 4.6 to the Asset Purchase Agreement and Schedule I.3 to Exhibit I to the Asset Purchase Agreement contained in the confidential supplement of the Applicants be sealed, kept confidential and not form part of the public record, but rather shall be placed separate and apart from all other contents of the Court file, in a sealed envelope attached to a notice that sets out the title of these proceedings and a statement that the contents are subject to a sealing order and shall only be opened upon further Order of this Court. —98
-7-
16. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,
regulatory or administrative body having jurisdiction in Canada, in the United States or in any other foreign jurisdiction to give effect to this Order and to assist the CCAA Parties and their
agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to
the CCAA Parties as may be necessary or desirable to give effect to this Order or to assist the CCAA Parties and their agents in carrying out the terms of this Order.
ENTERED AT / INBCRITi, TORONTO ON / BOOK NO: LE /DANS LE;-,EGISTRE NO.: SCHEDULE "A"
Additional Applicants
Cinram International General Partner Inc.
Cinram International ULC
1362806 Ontario Limited
Cinram (U.S.) Holding's Inc.
Cinram, Inc.
IHC Corporation
Cinram Manufacturing LLC
Cinram Distribution LLC
Cinram Wireless LLC
Cinram Retail Services, LLC
One K Studios, LLC —100
Schedule "B"—Form of Monitor's Asset Sale Transaction Certificate
Court File No. CV12-9767-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAI LIST
IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT A CT, R.S.C.1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND COMPANIES LISTED IN SCHEDULE "A"
Applicants
MONITOR'S ASSET SALE TRANSACTION CERTIFICATE
RECITALS
A. Pursuant to an Order of the Honourable Morawetz of the Ontario Superior Court of Justice (the "Court") dated June 25, 2012, FTI Consulting Canada Inc. was appointed as the Monitor (the "Monitor" ) of the Applicants and Cinram International Limited Partnership (together with the Applicants, the "CCAA Parties" ).
B. Pursuant to an Order of the Court dated [DATE] (the "Approval and Vesting Order" ), the Court approved the asset purchase agreement made as of June 22, 2012 (the "Asset Purchase Agreement" ) between Cinram International Inc. ("CII") and Cinram Acquisition, Inc. (the "Purchaser" ) and provided for the vesting in the Purchaser and/or the Asset Purchaser Nominee of the Asset Sellers'ight, title and interest in and to the Purchased Assets, which vesting is to be effective with respect to the Purchased Assets upon the delivery by the Monitor to the Purchaser of a certificate confirming (i) the payment by the Purchaser of the Purchase Price for the Purchased Assets; (ii) that the conditions to Closing as set out in Article 7 of the Asset Purchase Agreement have been satisfied or waived by CII and the Purchaser; and (iii) the Asset Sale Transaction has been completed to the satisfaction of the Monitor. C. Unless otherwise indicated herein, terms with initial capitals have the meanings set out in the Asset Purchase Agreement or the Approval and Vesting Order.
THE MONITOR CERTIFIES the following:
1. The Monitor has received the Purchase Price for the Purchased Assets payable on the Closing Date pursuant to the Asset Purchase Agreement;
2. The Monitor has received written confirmation from the Purchaser and CII that the conditions to Closing as set out in Article 7 of the Asset Purchase Agreement have been satisfied or waived by CII and the Purchaser;
3. The Asset Sale Transaction has been comp'leted to the satisfaction of the Monitor; and
4. This Certificate was delived by the Monitor at ]TIME] on fDATEj.
FTI Consulting Canada Inc., in its capacity as Monitor of the CCAA Parties, and not in its personal capacity
Per: Name: Title —102
Schedule "C"—Real Property
2255 Markham Road, Toronto, Ontario
Firstly:
PIN 06079-0067 (LT)
Part of Lot 18, Concession 3 Scarborough, designated as Parts 2 and 3 on Plan 64R6927 and Part 1 on Plan 64R7116, confirmed by 64B1990,subject to SC574898, Toronto, City ofToronto
Secondly
PIN 06079-0280 (LT)
Part of Lot 18, Concession 3 Scarborough, designated as Parts 2 and 3 on Plan 66R23795, subject to an easement. over Part 3 on Plan 66R23795 as in SC574898, City of Toronto
Being the whole of the said PINs.
Land Titles Division of the Toronto Registry No. 66. Schedule "9"—Claims to be deleted and expunged from title to Real Property
1. Charge in favour of JPMorgan Chase Bank, N.A. registered on May 8, 2006 as Instrument No. AT1131509;
2. Charge in favour of JPMorgan Chase BxN, N.A. registered on December 7, 2010 as Instrument No. AT2570745;
3. Charge in favour of JPMorgan Chase Bank, N.A. registered on April 11, 2011 as Instrument No. AT2663576;
4. Notice in favour of JPMorgan Chase Bank, N.A. registered on April 11, 2011 as Instrument No. AT2663577;
5. Charge in favour of JPMorgan Chase Bank, N.A. registered on January 16, 2012 a: Instrument No. AT2920218; and
6. Charge in favour of JPMorgan Chase Bank, N.A. registered on January 16, 2012 as Instrument No. AT2920219. —104
Schedule "E"—Permitted Encumbrances, Easements and Restrictive Covenants related to the Real Property
(unaffected by the Vesting Order)
1. Those matters referred to in Subsection 44(l) of the Land Titles Act, except paragraph 11 and 14, provincial succession duties and escheats or forfeiture to the Crown;
2. The rights of any person who would, but for the Land Titles Act, be entitled to the land or any part of it through length of adverse possession, prescription, misdescription or boundaries settled by convention;
3. Any lease to which subsection 70(2) of the Registry Act applies;
4. Transfer Easement registered on September 13, 1978 as Instrument No. SC574898;
5. Boundaries Act Plan registered on August 27, 1982 as Instrument No. 64BA1990;
6. Agreement registered on May 2, 1986 as Instrument No. TB318366;
7. Agreement registered on October 15, 1987 as Instrument No. TB454937;
8. Agreement registered on June 15, 1989 as Instrument No. TB611216;
9. Notice registered on November 3, 2005 as Instrument No. AT970042; and
10. Notice registered on July 24, 2006 as Instrument No. AT1205222. Schedule "P' Form of Monitor's Share Sale Transaction Certificate
Court File No. CV12-9767-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THK COMPANIES'REDITORS ARRANGEMENT 3CT, R.S.C.1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGKMKNT OF CINRAM INTERNATIONAL INC,, CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND COMPANIES LISTED IN SCHEDULE "A"
Applicaiits
MONITOR'S SHARK SALE TRANSACTION CERTIFICATE
RECITALS
A. Pursuant to an Order of the Honourable Morawetz of the Ontario Superior Court of Justice (the "Court" ) dated June 25, 2012, FTI Consulting Canada Inc. was appointed as i';~e Monitor (the "Monitor" ) of the Applicants and Cinram International Limited Partners'p (together with the Applicants, the "CCAA Parties" ),
B. Pursuant to an Order of the Court dated [DATE] (the "Approval-and Vesting Order" )., the Court approved the purchase offer made as of June 22, 2012 (the "Purchase Offer") by Cinram Acquisition, Inc. (the "Purchaser" ) to Cinram International Inc. ("CII"), 1362806 Ontario Limited (together with CII, the "Share Sellers" ) and provided for the vesting in the Purchaser or the Share Purchaser Nominee the Share Sellers'ight, title and interest in and to the
Purchased Shares, which vesting is to be effective with respect to the Purchased Shares upon the delivery by the Monitor to the Purchaser of a certificate confirming (i) the payment by the Purchaser of the Purchase Price for the Purchased Shares; (ii) that the conditions to Closing as 1 set out in Section 6 of the Purchase Offer and Article 6 of the Share Purchase Agreement have —106
been satisfied or waived by the Share Sellers and the Purchaser; and (iii) the Share Sale Transaction has been completed to the satisfaction of the Monitor.
C. Unless otherwise indicated herein, terms with initial capitals have the meanings set out in the Purchase Offer or the Approval and Vesting Order.
THE MONITOR CERTIFIES the following:
1. The Monitor has received the Purchase Price for the Purchased Shares payable on the Closing Date pursuant to the Purchase Offer;
2. The Monitor has received written confirmation from the Share Sellers and the Purchaser that the conditions to Closing as set out in Section 6 of the Purchase Offer and Section 6.3 of the Share Purchase Agreement and the deliveries set out in Section 6.2 of the Share Purchase Agreement have been satisfied or waived by the Share Sellers and the Purchaser;
3. The Share Sale Transaction has been completed to the satisfaction of the Monitor; and
4. This Ceifificate was delivered by the Monitor at [TIME] on [DATE].
FTI Consulting Canada Inc,, in its capacity as Monitor of the CCAA Parties, and not in its personal capacity
Per: Name: Title IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C. Court File No: CU12-9767-00CL 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants
ONTARIO SUPERIOR COURT OF JUSTICE- COMMERCIAL LIST
Proceeding commenced at Toronto
APPROVAL AND VESTING ORDER
GOODMANS LLP Barristers 8r, Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert 1. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹:58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants
16089693
This is Exhibit "C"referred to in the
affidavit of John H. Bell
sworn before me, this
14'ay of August, 2012.
A Commissioner for Ta14kg Affidavits
r JONATHAN ROSS EDGE, a Commissioner, etc., Province of Ontario, while a Student-at-Law. Esaires May 5, 2Of4. —109
IN THE UNITED STATES BANKRUPTCY COURT FOR THK DISTRICT OF DELAWARE
In re Chapter 15
CINRAM INTERNATIONAL INC., et aL,' Case No. 12-11882(KJC)
Debtors in a Foreign Proceeding. (Jointly Administered)
——x Re: Docket No. 9
ORDER (I) RECOGNIZING THE CANADIAN SALE ORDER, (II) AUTHORIZING AND APPROVING THE SALK FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES, AND OTHER INTERESTS, (III) AUTHORIZING THE ASSUMPTION AND ASSIGNMKNT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (IV) GRANTING RELATED RKLIKF
Upon consideration of the Foreign Representative 's Motion for Entry ofan Order
(I) Recognizing the Canadian Sale '0'r'de'r', '(II) Authoriz'r'ng and Approving the Sale Free and j
Clear ofAll Liens, Claims, Encumbrances, and Other Interests, (III) Authorizing the Assumption
and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting
Certain Related Relief dated June 25, 2012 (the "Motion" ) filed by Cinram International ULC
(the "Foreign Representative" ), in its capacity as the court-appointed and duly authorized
foreign representative for the above-captioned debtors (collectively, the "Debtors" ) in a
proceeding commenced under Canada's Companies 'reditors Arrangement Act, R.S.C. 1985,
c, C-36, as amended (the "CCAA Proceeding" ) pending before the Ontario Superior Court of
Justice (the "Canadian Court" ), for entry of an order (this "Order" ), pursuant to sections 363,
365, 1501, 1507, 1520, 1521, 1525, 1527, and 105(a) of title 11 of the United States Code, as
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M18 2W3, Canada.
01:12313854.1 amended from time to time (the "Bankruptcy Code"), Rules 2002, 6004, and 6006 of the
Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules" ), and Rule 6004-1(b) of the
Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for
the District of Delaware (the "Local Rules" ), {a)recognizing the Approval and Vesting Order
entered by the Canadian Court on July 12, 2012 (the "Canadian Sale Order" ), (b) authorizing
and approving the sale (the "Sale") of substantially all of the Asset Sellers'roperty and assets
used in connection with the business carried on by the Asset Sellers in North America
(collectively, the "Assets"), excluding, without limitation, the Olyphant Facility, the Excluded
Assets, and such other assets identified in the APA, pursuant to the terms and conditions of that
certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram
Group, Inc. {the "Purchaser" ), a copy of which is attached to the Motion as Exhibit 8, free and
clear of liens, claims, encumbrances, and other interests, (c) authorizing the" assumption and
assignment of the Assumed Contracts (as defined in the APA), Real Property Leases, Personal
Property Leases for property located in the United States, and Assumed Employee Plans
(collectively, the "Assumed Contracts" ) to the Purchaser, and (d) granting certain relief related
thereto; and upon sufficient and adequate notice of the Motion; and no other or further notice of
the Motion needing to be provided; and it appearing that this Court has jurisdiction over this
matter pursuant to sections 157 and 1334 of title 28 of the United States Code, and the Amended
Standing Order of Reference from the United States District Court for the District of Delaware
dated as of February 29, 2012; and it appearing that the legal and factual bases set forth in the
Motion establish just cause for the relief granted herein; and it appearing that the relief requested
in the Motion is in the best interests of the Foreign Representative, the Debtors, their creditors,
i
Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the APA.
01:12313854.1 and other parties in interest; and this Court having reviewed and considered the (a) Declaration
ofJohn Bell in Support of(I) Verified Chapter I5 Petitions, (II) Foreign Representative 's Motion
for Order Granting Provisional and Final Relief in Aid ofForeign CCAA Proceeding and
(III) Certain Related Relief, and (b) Declaration ofMark Hootnick in Support ofthe Foreign
Representative 's Motion for Entry ofan Order (I) Recognizing the Canadian Sale Order,
(II) Authorizing and Approving the Sale Free and Clear ofAll Liens, Claims, Encumbrances,
and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory
Contracts and Unexpired Leases;and (IV) Granting Related Relief; and upon the record of the
hearings on the Motion and all other pleadings and proceedings in these chapter 15 cases; and
after due deliberation thereon and good and sufficient cause appearing therefor,
THE COURT HEREBY FINDS AND DETERMINES THAT:
Jurisdiction, Final Order, and Statutory Predicates
A. This Court has jurisdiction over the Motion, the transactions contemplated by the
APA and any other ancillary documents and agreements related thereto pursuant to
28 U.S,C. $$ 157(b)(1)and 1334(a), and the Amended Standing Order of Reference &om the
United States District Court for the District of Delaware dated as of February 29, 2012. This
matter is a core proceeding pursuant to 28 U.S.C. f 157(b)(2). Venue of these chapter 15 cases
and the Motion in this Court and this District is proper under 28 U.S.C. $ 1410.
B. This Order constitutes a final and appealable order as set forth in
28 U.S.C. $ 158(a). Notwithstanding Bankruptcy Rules 6004(h), 6006(d), or 6006(g), this Court
The findings and conclusions set forth herein constitute this Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. All findings of fact and conclusions of law announced by this Court at the Sale Hearing and any other proceeding related to the Motion are incorporated herein to the extent not inconsistent herewith. To the 'xtent that any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.
01:12313854.1
3 finds that there is no reason for delay in the implementation of this Order, and directs entry of
judgment as set forth herein.
C. The bases for the relief sought in the Motion are sections 363(b), (f) and (m), 365,
1501, 1507, 1520, 1521, 1525, 1527, and 105(a) of the Bankruptcy Code, Bankruptcy
Rules 2002, 6004, and 6006, and Local Rule 6004-1.
D. The relief granted herein is necessary and appropriate, serves the public interest
and the interests of international comity, is consistent with the public policy of the United States,
is warranted pursuant to sections 1520 and 1521 of the Bankruptcy Code, and will not cause any
hardship to any parties in interest that is not outweighed by the benefits of the relief granted,
E. The relief requested $n the Motion, including recognition of the Canadian Sale
Order and approval of the APA, consummation of the Sale to the Purchaser, and assumption and
assignment of the Assumed Contracts to the Purchaser is in the best interests 'of the Foreign
Representative, the Debtors, their creditors, and other parties in interest in these chapter 15 cases.
F. On July 12, 2012, the Canadian Court entered the Canadian Sale Order, wherein
the Canadian Court, among other things, (a) approved the APA and certain ancillary agreemenis
thereto, (b) authorized and directed the Debtors and their Canadian affiliates to take all steps
necessary to consummate the transactions contemplated by the APA, (c) vested in the Purchaser
absolute, clear, and unencumbered title in and to the Assets free and clear of all liens and
encumbrances relating to, accruing or arising any time prior to the Closing Date
(collectively, the "Liens"), claims and other interests, with such Liens, claims, and interests
attaching to the proceeds generated from the sale of the Assets, and (d) found that the APA is
commercially reasonable and is in the best interests of the Debtors, their Canadian affiliates, and
all of their stakeholders.
0 i:123i3854.i The Purchaser
G. The APA, each of its terms, and each of the transactions contemplated therein
were negotiated, proposed and entered into by Cinram International Inc. and the Purchaser in
good faith, without collusion, and from arm'-length bargaining positions. The Purchaser is a
"good faith purchaser" within the meaning of section 363(m) of the Bankruptcy Code, is
purchasing the Assets in good faith, and, accordingly, is entitled to all of the protections afforded
by section 363(m) of the Bankruptcy Code.
H. The Purchaser is not an "insider" or "affiliate" of the Foreign Representative or
the Debtors as those terms are defined in the Bankruptcy Code. None of the Foreign
Representative, the Debtors, nor the Purchaser has engaged in any conduct that would cause or
permit the APA or the Sale to be avoided or permit any award of attorney's fees, costs, or
damages under section 363(n) of the Bankruptcy Code. The Purchaser has not acted in a
collusive manner with any person and the aggregate price paid by Purchaser for the Assets was
not controlled by any agreement among bidders or potential bidders.
No Fraudulent Transfer
I. The consideration provided by the Purchaser pursuant to the APA: (a) is fair and
reasonable; (b) is the highest and best offer for the Assets; (c) will provide a greater recovery to
the Debtors'reditors than would be provided by any other available alternative; and
(d) constitutes reasonably equivalent value (as those terms are defined in each of the Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, and section 548 of the
Bankruptcy Code). The consideration provided by the Purchaser pursuant to the APA also
constitutes fair consideration under the Bankruptcy Code and the laws of the United States, any
state, territory, possession, or the District of Columbia. No other person, entity, or group of
entities has offered to purchase the Assets for greater economic value to the Debtors than the
0 i' 2313854.1
5 Purchaser. The Debtors'eterminations that the APA constitutes the highest and best offer for
the Assets were a valid, sound, and reasonable exercise of the Debtors'usiness judgment.
J. The Purchaser is not a mere continuation of the Debtors, and there is no
continuity of enterprise between the Debtors and the Purchaser. The Purchaser is not holding
itself out to the public as a continuation of the Debtors. The Purchaser is not a successor to the
Debtors and the Sale does not amount to a consolidation, merger, or de facto merger of Purchaser
and the Debtors.
Validitv of Transfer
K. The Foreign Representative and Debtors, where applicable, (a) have full corporate
power and authority to execute an/deliver the APA and all other documents contemplated
thereby, (b) have all corporate authority necessary to consummate the transactions contemplated
by the APA, and (c) are authorized to take all corporate action necessary to authorize and
approve the APA and the consummation of the transactions contemplated thereby. No consents
or approvals, other than those expressly provided for in the APA, are required for the Debtors to
consummate the Sale, the APA, or the transactions contemplated thereby.
L. The APA was not entered into for the purpose of hindering, delaying, or
defrauding creditors under the Bankruptcy Code or under the laws of the United States, any state,
territory, or possession, or the District of Columbia. Neither the Debtors nor the Purchaser are
fraudulently entering into the transactions contemplated by the APA.
M. The Debtors have good and marketable title to the Assets and are the lawful
owners of the Assets. Subject to section 363{f)of the Bankruptcy Code, the transfer of the
Assets to the Purchaser will be, as of the closing of the transactions contemplated by the APA
(the "Closing Date"), a legal, valid, and effective transfer of the Assets, which transfer vests or
will vest the Purchaser with all right, title, and interest in the Assets free and clear of {a)all 01:12313854.1 Liens, and (b) all debts arising under, relating to, or in connection with any act of the Debtors or
claims (as that term is defined in section 101(5)of the Bankruptcy Code and herein), liabilities,
obligations, demands, guaranties, options, rights, contractual commitments, restrictions, interests,
matters, or any similar rights of any kind or nature, whether (i) arising prior to or subsequent to
the commencement of this case, (ii) imposed by agreement, understanding, law, equity, or
otherwise, (iii) known or unknown, (iv) secured or unsecured, or in the nature of setoff or
recoupment, (v) choate or inchoate, (vi) filed or unfiled, (vii) scheduled or unscheduled,
(viii) noticed or unnoticed, (ix) recorded or unrecorded, (x) perfected or unperfected,
(xi) allowed or disallowed, (xii) contingent or non-contingent, (xiii) liquidated or unliquidated,
(xiv) matured or unmatured, (xv) material or nonmaterial, (xvi) disputed or undisputed,
(xvii) arising prior to or subsequent to the commencement of the CCAA Proceeding or these
chapter 15 cases, or (xviii) imposed by agreement, understanding, law, equity, or otherwise,
including claims otherwise arising under the doctrines of successor liability, in each case to the
fullest extent permitted by law (collectively as described in this subclause {'b'), (the "Claims" ),
relating to, accruing, or arising any time prior to the Closing Date, except to the extent expressly
set forth in the APA.
N. On the Closing Date, this Order shall be construed, and shall constitute for any
and all purposes, a full and complete general assignment, conveyance, and transfer of the
Debtors'nterests in the Assets. This Order is and shall be effective as a determination that, on
the Closing Date and except to the extent expressly set forth in the APA, all Liens, Claims, and
other interests of any kind or nature whatsoever existing as to the Assets prior to the Closing
Date shall have been unconditionally released, discharged, and terminated, in each case to the
fullest; extent permitted by law, and that the conveyances described herein have been effected;
01:12313854.1 provided, that such Liens, Claims, and other interests shall attach to the proceeds of the Sale in
the order of their priority, with the same validity, force, and effect which they now have against
the Assets.
O. This Order is and shall be binding upon and govern the acts of all persons and
entities, including all filing agents, filing officers, title agents, title companies, recorders of
mortgages, recorders of deeds, registrars of deeds, administrative agencies, governmental
departments, secretaries of state, federal, state, and local officials, and all other persons and
entities who may be required by operation of law, the duties of their office, or contract, to accept,
file, register, or otherwise record or release any documents or ins~ments, or who may be
required to report or insure any title or state of title in or to any lease; and each of the foregoing
persons and entities is hereby directed to accept for filing any and all of the documents and
instruments necessary and appropriate to consummate the transactions contemplated by the APA.
P. To the greatest extent available under applicable law, the Purchaser shall be
authorized, as of the Closing Date, to operate under any license, permit, registration, and
governmental authorization or approval of the Debtors with respect to the Assets, and upon enti y
of this Order, all such licenses, permits, registrations, and governmental authorizations and
approvals shall be deemed to be transferred to the Purchaser as of the Closing Date.
g. To the extent permitted by section 525 of the Bankruptcy Code, no governmental
unit may revoke or suspend any permit or licensee relating to the operation of the Assets sold,
transferred, or conveyed to the Purchaser on account of the filing or pendency of these
chapter 15 cases or the consummation of the transactions contemplated by the APA.
Section 363(fi '. The conditions of section 363(f}of the Bankruptcy Code have been satisfied in
full and, upon entry of this Order the Debtors may sell the Assets free and clear of all Liens, OI:12313854.1 Claims, encumbrances, and interests, in each case to the fullest extent permitted by law and
except as otherwise provided in the APA or the Canadian Sale Order. The Purchaser would not
have entered into the APA and would not consummate the transactions contemplated thereby if
the Sale and the assumption of liabilities and obligations as set forth in the APA by the Purchaser
were not free and clear of Liens and Claims as provided herein.
S. Except to the extent expressly set forth in the APA, the Purchaser shall not be
responsible for any Liens or Claims, including, without limitation, in respect of (a) any labor or
employment agreements, (b) any mortgages, deeds of trust and security interests,
(c) intercompany loans and receivables between the Debtors and any non-debtor subsidiary,
(d) any pension, welfare, compensation, or other employee benefit plans, agreements, practices,
and programs, including, without limitation, any pension plan of any Debtors, (e) any other
employee, worker's compensation, occupational disease or unemployment or temporary
disability related claim, including, without limitation, claims that might otherwise arise under or
pursuant to (i) the Employee Retirement Income Security Act of 1974, as amended, (ii) the Fair
Labor Standards Act, (iii) Title VII of the Civil Rights Act of 1964, (iv) the Federal
Rehabilitation Act of 1973, (v) the National Labor Relations Act, (vi) the Worker Adjustment
and Retraining Act of 1988, (vii) the Age Discrimination and Employee Act of 1967 and the Age
Discrimination in Employment Act, as amended, (viii) the Americans with Disabilities Act of
1990, (ix) the Consolidated Omnibus Budget Reconciliation Act of 1985, (x) state discrimination
laws, (xi) state unemployment compensation laws or any other similar state laws, or (xii) any
other state or federal benefits or claims relating to any employment with the Debtors or any of
their predecessors, (f) Claims or Liens arising under any environmental laws with respect to any
assets, owned or operated by Debtors or any of their predecessors at any time prior to the Closing
01:12313854.1 9 Date and any of the Debtors'iabilities other than those assumed under the APA, (g) any bulk
sales or similar law, (h) any tax statutes or ordinances, including, without limitation, the Internal
Revenue Code of 1986, as amended, and (i) any other theories of successor liability, except as
expressly set forth in the APA.
T. Except to the extent expressly stated in the APA, the Purchaser shall have no
liability, obligation, or responsibility under the WARN Act (29 U.S.C. g 210 et seq.), the
Comprehensive Environmental Response Compensation and Liability Act, or any foreign,
federal, state, or local labor, employment, or environmental law by virtue of the Purchaser's
purchase of the Assets or assumption of any liabilities identified in the APA.
U. Upon entry of this Order, the Debtors may sell the Assets free and clear of all
Liens and Claims against the Debtors or any of the Assets to the extent provided in the APA and
this Order because, in each case, one or more of the standards set forth in sec'tion 363(f)(l)-(5) of
the Bankruptcy Code has been satisfied. Those holders of Liens or Claims against the Debtors or
any of the Assets who did not object or who withdrew their objections to the Sale or the Motion
are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code.
V. A certified copy of this Order may be filed with the appropriate clerk and/or
recorded with the recorder to act to cancel any Liens and other encumbrances of record.
W. If any person or entity which has filed statements or other documents or
agreements evidencing Liens on, or interests in, all or any portion of the Assets shall not have
delivered to the Debtors prior to the Closing Date, in proper form for filing and executed by the
appropriate parties, termination statements, instruments of satisfaction, releases of Liens, and any
other documents necessary for the purpose of documenting the release of all Liens or interests
't which the person or entity has or may assert with respect to all or any portion of the Assets, the
01:12313854.1 10 Foreign Representative is hereby authorized and directed, and the Purchaser is hereby authorized, on behalf of the Debtors and each of the Debtors'reditors, to execute and file such statements, instruments, releases, and other documents on behalf of such person or entity with respect to the Assets.
Compelling Circumstances for an Immediate Sale
X. Good and sufficient reasons for approval of the APA and the Sale have been articulated. The relief requested in the Motion is in the best interests of the Foreign
Representative, the Debtors, their-creditors, and other parties in interest. The Debtors have demonstrated (a) good, sufficient, and sound business purposes and justifications for approving the APA, and (b) compelling circumstances for the Sale outside of (i) the ordinary course of business pursuant to section 363(b) of the Bankruptcy Code, and (ii) a plan of reorganization, in that, among other things, the immediate consummation of the Sale to the Purchaser is necessary and appropriate to maximize the value of the Debtors'ssets and distributions to their creditors.
Y. To maximize the value of the Assets and preserve the viability of the business to which the Assets relate, it is essential that the Sale occur within the time constraints set forth in the APA. Time is of the essence in consummating the Sale.
Z. Given all of the circumstances of these chapter 15 cases and the adequacy and fair value of the consideration provided under the APA, the Sale constitutes a reasonable and sound exercise of the Debtors'usiness judgment and should be approved.
General Authorization of Assumption and Assignment
AA. The consummation of the Sale and the assumption and assignment of the Closing
Assumed Contracts (as hereinafter defined) designated by Purchaser for assumption and
assignment at Closing and the Open Contracts and the Olyphant Contracts designated by
Purchaser after Closing for assumption and assignment, are legal, valid, and properly authorized
11 under all applicable provisions of the Bankruptcy Code, including sections 363(b), 363(f),
363(m), 365, and 105(a) thereof. Good and sufficient notice of the assumption and assignment
of the Closing Assumed Contracts at Closing and the procedures for the assumption and
assignment ofthe Open Contracts and Olyphant Contracts after Closing was provided to contract
counterparties by service of (a) the Motion and (b) the notice of potential assumption and
assignment of Closing Assumed Contracts. The Assumption and Assignment Procedures (as
defined in the Motion) are good and sufficient under the circumstances, including in light of the
CCAA Proceeding and the Canadian Sale Order.
BB. Pursuant to sections 365 and 105(a) of the Banlauptcy Code, and subject to and
conditioned upon the closing ofthe"Sale, and subject to the designation rights and procedures
contained in this Order and section 9.2 of the APA, the Debtors and Foreign
Representatives'ssumption
and assignment to the Purchaser, and the Purchaser's assumption'ef the Closing
Assumed Contracts, the Open Contracts and the Olyphant Contracts is hereby approved.
CC. Except as otherwise set forth herein and subject to the procedures set forth herein,
the Debtors are hereby authorized and directed in accordance with sections 363, 365, and 105(a,';
of the Bankruptcy Code to assume and assign to the Purchaser the Closing Assumed Contracts
free and clear of all Claims, Liens, or other interests of any kind or nature whatsoever, without
the need for any further documentation. The Debtors and the Purchaser have cured, or have
provided adequate assurance that they will cure on or prior to the Closing Date as to each
Closing Assumed Contract (or for each Open Contract and Olyphant Contract that becomes an
Assumed Contract after the Closing Date as a result of designation by the Purchaser, have
provided adequate assurance that they will promptly cure as to each Open Contract and Olyphant
Contract being designated by the Purchaser for assumption and assignment and becoming an
01:12313854.1
12 Assumed Contract, subject to the applicable counterparty's right to object in accordance with the
procedures set forth herein) all defaults existing as of or prior to assumption and assignment to
the Purchaser.
Assumntion and Assignment of Closing Assumed Contracts
DD. On July 6, 2012, the Debtors and the Foreign Representative, in compliance with
section 9.2 of the APA, filed with this Court and served upon counterparties to all unexpired
leases and executory contracts related to the Purchased Assets (without regard to whether the
Purchaser had then designated such leases and executory contracts for assumption and
assignment) a notice that such unexpired leases and executory contracts may be designated for
assumption and assignment to the Purchaser in connection with the Closing, including cure
amounts proposed to be paid to the applicable counterparty in the event that such contracts are
assumed and assigned to the Purchaser in connection with the Closing. Pursuant to the terms of
such notice, counterparties were provided ten Business Days to object to the assumption and
assignment of their unexpired leases and executory contracts. Such notice is good, sufficient,
and appropriate under the circumstances. If an objection to assumption and assignment of any
executory contract or unexpired lease set forth on such notice is timely filed, a hearing on such
objection shall be held before this Court as soon as reasonably practicable thereafter and, in any
case, prior to the Closing Date. Any executory contract or unexpired lease set forth on such
notice that is not assumed and assigned to the Purchaser in connection with the Closing shall be
treated in accordance with the procedures set forth below for Open Contracts.
EE. The Purchaser shall have the right, consistent with section 9.2 of the APA, to
determine at any time before or at Closing which of the executory contracts and unexpired leases
will bq assumed and assigned to it at Closing. Within one Business Day after the Closing, the
01:12313854.1 13 Foreign Representative shall file with this Court a list of all Assumed Contracts for which this
Court authorized and approved assumption and assignment and that were actually assumed and
assigned to the Purchaser at the Closing (the "Closing Assumed Contracts" ), and shall serve
notice of such assumption and assignment upon all counterparties to such Closing Assumed
Contracts.
Assumption and Assignment of Open Contracts
FF. Notwithstanding anything to the contrary herein, from and after the Closing Date
the Purchaser shall have the right, exercisable without limitation at any time and from time to
time, to notify the Seller that it is designating any Assumed Contracts, Real Property Leases
Personal Property Leases, or Assuaged Employee Plans not assigned to the Purchaser on the
Closing Date (each, an "Open Contract" ) for assumption and assignment to the Purchaser.
Within three Business Days of their receipt of such a notice, the Debtors shall file with this Court
notice of such designation and serve a notice (a "Designation Notice" ) upon the applicable
counterparty to such Open Contract ofthe assumption and assignment of its contract, including
an updated cure amount to be paid in connection with such assumption and assignment. Such
counterparties shall have seven Business Days from receipt of such Designation Notice to file an
objection to such assumption and assignment with this Court. If no such objection is filed, the
Debtors shall be authorized to assume and assign such Open Contract to the Purchaser and pay
such cure amount in full satisfaction of all defaults under the Open Contract without any further
order of this Court. The applicable date of assumption shall be the date of service of the
Designation Notice. If such an objection is filed, a hearing shall be scheduled before this Court
as soon as reasonably practicable thereafter. The Purchaser shall endeavor in good faith to
comp'lete the assumption and assignment or rejection process for all Open Contracts by
September 15, 2012, Oi:i23i3854.1 14 —123
GG. Notwithstanding anything herein, the Debtors may, on not fewer than ten
Business Days'rior written notice to the Purchaser (each such notice, a "Rejection Notice" ),
cause to be rejected any Open Contract set forth in the Rejection Notice, subject to the right of
the Purchaser, upon receipt of the Rejection Notice and prior to the rejection of the applicable
Open Contract, to either (a) designate such Open Contract for assumption and assignment in
accordance with the procedures set forth in Section 9.2(j)of the APA and herein, as applicable,
or (b) agree in writing to reimburse the applicable Debtors for the out-of-pocket expenses
incurred under such Open Contract from and after the date of the Rejection Notice until the date
on which the Purchaser provides the Debtors with notice of the Purchaser's decision as to
whether to assume such Open Contract or permit its rejection, in which case the Debtors shall
refrain from rejecting such Open Contract until the date they receive notification of such decision
by the Purchaser. The Debtors shall act reasonably and in good faith in providing any Rejection
Notices, including with respect to the quantity of Open Contracts set forth therein, and shall
cooperate with the Purchaser in determining whether or not to assume any Open Contract.
Assumntion and Assignment of Olvnhant Contracts
HH. Notwithstanding anything to the contrary herein, from and after the Closing Date
the Purchaser shall have the right, exercisable without limitation at any time and from time to
time, to notify the Seller that it is designating any Olyphant Contract for assumption and
assignment to the Purchaser. Within three Business Days of their receipt of such a notice, the
Debtors shall file with this Court notice of such designation and serve a Designation Notice upon
the applicable counterparty to such Olyphant Contract, including the proposed cure amount to be
paid in connection with such assumption and assignment. Such counterparties shall have seven
Business Days from receipt of such Designation Notice to file an objection to such assumption
and assignment with this Court. Ifno such objection is filed, the Debtors shall be authorized to 01:12313854.1 15 124
assume and assign such Olyphant Contract to the Purchaser and pay such cure amount in full
satisfaction of all defaults under the Olyphant Contract without any further order of this Court.
The applicable date of assumption shall be the date of service of the Designation Notice. If such
an objection is filed, a hearing shall be scheduled before this Court as soon as reasonably
practicable thereafter.
Assumntion and Assipnmenf Generally
II. The Assumed Contracts, including all Open Contracts and Olyphant Contracts
that subsequently are assumed and assigned to the Purchaser in accordance with the procedures
set forth in this Order, shall be transferred to, and remain in full force and effect for the benefit
of, the Purchaser in accordance wig their respective terms, notwithstanding any provision in any I such Assumed Contract (including those ofthe type described in sections 365(b)(2) and (f) of the
Bankruptcy Code) that prohibits, restricts, or conditions such assignment or transfer. In addition,
pursuant to section 365(k) of the Bankruptcy Code, the Debtors shall be relieved from any
further liability with respect to the Assumed Contracts for any breach of such Assumed Contract
occurring after such assignment to, and assumption by, the Purchaser, except as provided in the
APA,
JJ. No sections or provisions of any Assumed Contract, including all Open Contracts
and Olyphant Contracts that subsequently are assumed and assigned to the Purchaser in
accordance with the procedures set forth in this Order, that purport to provide for additional
payments, penalties, charges, or other financial accommodations in favor of the non-debtor
counterparty to the Assumed Contracts based on assignment of the Assumed Contract, the
commencement of these cases, or the Gnancial condition or insolvency of any of the Debtors
shall have any force or effect with respect to the Sale and assignments authorized by this Order.
Such provisions constitute unenforceable anti-assignment provisions under section 365(f) of the 01:12313854.1 —125
Banlauptcy Code and are otherwise unenforceable under section 365(e) of the Bankruptcy Code.
No assignment of any such Assumed Contract to the Purchaser shall in any respect constitute a
default under any such Assumed Contract. The non-debtor party to each Assumed Contract to be
assumed and assigned at the Closing received notice as set forth in the Motion and shall be
deemed to have consented to such assignment under section 365(c)(1)(B)of the Bankruptcy
Code and the Purchaser shall enjoy all of the Debtors'ights and benefits under each such
Assumed Contract, including all Open Contracts and Olyphant Contracts that subsequently are
assumed and assigned to the Purchaser in accordance with the procedures set forth in this Order,
as of the applicable date of assumption without the necessity of obtaining such non-debtor
party's written consent to the assumption or assignment thereof.
KK. The failure of the Foreign Representative, Debtors, or Purchaser to enforce at any
time one or more terms or conditions of any Assumed Contract, Open Contract, or Olyphant
Contract shall not be a waiver of such terms or conditions or of the Foreign Representative's,
Debtors', or Purchaser's rights to enforce every term and condition of such contract.
LL. Subject to the procedures set forth herein, all parties to the Assumed Contracts,
including all Open Contrycts and Olyphant Contracts that subsequently are assumed and
assigned to the Purchaser in accordance with the procedures set forth in this Order, are forever
barred and enjoined from raising or asserting against the Purchaser any assignment fee, default,
breach, Claim, pecuniary loss, or condition to assignment arising under or related to such
contract existing as of the Closing Date or arising by reason of the Sale, these chapter 15 cases,
or the CCAA Proceeding.
MM. Subject to the rights of contract counterparties to file objections as set forth
herein„ the Purchaser has demonstrated adequate assurance of future performance with respect to
01:12313854.1 17 the Assumed Contracts pursuant to sections 365(b)(1)(C) and 365(f)(2)(B)of the Bankruptcy
Code.
NN. In the event that the Purchaser shall determine to reject or refuse assignment of any Assumed Contracts in accordance with the procedures set forth in this Order, the Purchaser shall have no obligations with respect thereto, including any obligation to cure defaults thereunder.
Prohibition of Actions Against the Purchaser
OO. Except as otherwise specifically provided herein or in the APA and to the fullest extent permitted by law, the Purchaser shall not be liable for any Claims against the Foreign
Representative or the Debtors, or arly of their predecessors or affiliates, and the Purchaser shall have no successor or vicarious liabilities of any kind or character, including pursuant to any theory of antitrust, environmental„successor, or transferee liability, labor law,- de facto merger, mere continuation, or substantial continuity, whether known or unknown as of the Closing Date, now existing or hereafter arising, whether fixed or contingent, whether asserted or unasserted, whether legal or equitable, whether liquidated or unliquidated, including liabilities on account o! warranties, intercompany loans and receivables between the Debtors and any non-debtor subsidiary, liabilities relating to or arising from any environmental laws, and any taxes arising, accruing or payable under, out of, in connection with, or in any way relating to the operation of any of the Assets prior to the Closing Date.
PP. Upon entry of this Order, all persons and entities are forever barred, estopped, and permanently enjoined from asserting against the Purchaser, any of its successors or assigns, their property, or the Assets, such persons'r entities'iens, Claims, or interests in and to the Assets that arbse prior to the Closing Date, including the following actions: (a) commencing or continuing in any manner any action or other proceeding against the Purchaser, any of its —127
affiliates, its successors, assets, or properties; (b) enforcing, attaching, collecting, or recovering
in any manner any judgment, award, decree, or order against the Purchaser, any of its affiliates,
its successors, assets, or properties; (c) creating, perfecting, or enforcing any Lien or other Claim
against the Purchaser, any of its affiliates, its successors, assets, or properties; (d) asserting any
setoff; right of subrogation, or recoupment of any kind against any obligation due the Purchaser,
any of its affiliates, or successors; (e) commencing or continuing any action, in any manner or
place, that does not comply or is inconsistent with the provisions of this Order, other orders of
this Court or the Canadian Court, the APA, or actions contemplated or taken in respect thereof;
or (f) revoking, terminating, failing, or refusing to transfer or renew any license, permit, or
authorization to operate any of the Assets or conduct any of the businesses operated with the
Assets.
QQ. On the Closing Date, or as soon as possible thereafter, each creditor is authorized
and directed, and the Purchaser is hereby authorized, on behalf of each of the Debtors'reditors,
to execute such documents and take all other actions as may be necessary to release Liens,
Claims, and other interests in or on the Assets, if any, as provided for herein, as such Liens may
have been recorded or may otherwise exist.
RR. Upon entry of this Order, all persons and entities shall be forever prohibited and
enjoined from taking any action that would adversely affect or interfere with the ability of the
Debtors to sell and transfer the Assets to the Purchaser in accordance with the terms of the APA
and this Order.
SS. The Purchaser has given substantial consideration under the APA for the benefit
of the Debtors and their creditors. The consideration given by the Purchaser shall constitute
valid and valuable consideration for the releases of any potential Claims and Liens pursuant to
01:12313854.1 19 this Order, which releases shall be deemed to have been given in favor ofthe Purchaser by all
holders of Liens against or interests in, or Clauns against the Debtors, or any of the Assets.
TT. Effective as ofthe Closing Date, the Purchaser and its successors and assigns
shall be designated and appointed the Debtors'rue and lawful attorney and attorney-in-fact, with
full power of substitution, in the Debtors'ame and stead, on behalf of and for the benefit of the
Purchaser, its successors and assigns, for the limited purposes of demanding and receiving from
any third party any and all of the Assets and to give receipts and releases for and in respect of the
Assets, or any part thereof, and from time to time to institute and prosecute against third parties
for the benefit of the Purchaser and its successors and assigns any and all proceedings at law, in
equity, or otherwise, which the Purchaser and its successors and assigns may deem proper for the
collection or reduction to possession of any of the Assets.
Notice of the Motions. Sale. and Sale Hearing
UU. As evidenced by the certificates of service filed with this Court: (a) proper,
timely, adequate, and sufficient notice of the Motions and the Sale Hearing has been provided by
the Foreign Representative; (b) such notice was good, sufficient, and appropriate under the
circumstances; and (c) no other or further notice of the Motion, the proposed Sale, or the Sale
Hearing is or shall be required.
UV. A reasonable opportunity to object and be heard with respect to the Motion and
the relief requested therein, including the assumption and assignment of the Assumed Contracts
and any cure costs related thereto under section 365 of the Bankruptcy Code, has been afforded
to all interested persons and entities.
WW. The disclosures made by the Foreign Representative concerning the Motion, the
Sale Bearing, and the assumption and assignment of the Assumed Contracts were good,
complete, and adequate, 01;12313854.i 20 —129
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. The Motion is granted.
2. All objections, if any, to the Motion, the relief requested therein, or (to the extent
filed prior to the date hereof} the assumption and assignment of a Closing Assumed Contract that
have not been withdrawn, waived or settled as announced to this Court at the Sale Hearing, or by
stipulation filed with this Court, and all reservations of rights included therein, are hereby
overruled on the merits, except as expressly provided herein.
3. The Canadian Sale Order is hereby recognized and affirmed in all respects, and
shall be fully enforceable pursuant to its terms.
4. The APA, all transac&ions contemplated therein, and all of the terms and
conditions thereof are hereby approved.
5. Pursuant to sections 363 and 105 of the Bankruptcy Code, the Foreign
Representative and the Debtors are authorized to enter into and perform all of their obligations
under and comply with the terms of the APA and consummate the Sale, pursuant to and in
accordance with the terms and conditions of the APA and this Order, and to take any and all
actions necessary and appropriate to implement the Canadian Sale Order, the APA, and this
Order.
6. The Debtors are authorized in accordance with sections 365 and 105(a) of the
Bankruptcy Code to assume and assign the Assumed Contracts, Open Contracts, and Olyphant
Contracts to the Purchaser free and clear of all Claims in accordance with the procedures set
forth in this Order and section 9.2 of the APA, all of which such procedures are approved.
7. The Assumed Contracts shall be transferred to, and remain in full force and effect
for the benefit of the Purchaser in accordance with their respective terms, notwithstanding any
21 130
provision in any such Assumed Contract (including those of the type described in
sections 365(e)(l) and (f) of the Bankruptcy Code) that prohibits, restricts, or conditions such
assignment or transfer. There shall be no rent accelerations, assigmnent fees, increases, or any
other fees charged to the Purchaser or the Debtors as a result of the assumption or assignment of
Assumed Contracts, the commencement of these chapter 15 cases, or the commencement of the
CCAA Proceeding. No Assumed Contract, including all Open Contracts and Olyphant Contracts
that subsequently are assumed and assigned to the Purchaser in accordance with the procedures
set forth in this Order, may be terminated, or the rights of any party modified in any respect,
including pursuant to any "change of control" clause, by any other party thereto, as a result of the
transactions contemplated by the APA.
8. The sale of the Assets to the Purchaser shall constitute a legal, valid, and effective
transfer of the Foreign Representative's and the Debtors'ight, title, and int'crest in the Assets
notwithstanding any requirement for approval or consent by any person or entity and shall vest
the Purchaser with any and all right, title, and interest of the Foreign Representative and the
Debtors in and to the Assets free and clear of all Liens, Claims, encumbrances, and other
interests pursuant to section 363(f) of the Bankruptcy Code except as otherwise provided in the
APA, with such Liens and Claims attaching to the proceeds generated from the sale of the Assets
in the order of their priority, with the same validity, force, and effect which they now have
against the Assets.
9. This Order and the APA shall be binding in all respects upon the Foreign
Representative, the Debtors, all creditors and equity-holders of the Debtors, all counterparties to
the Assumed Contracts, all successors and assigns of the Debtors and their affiliates and
subsidiaries, and any trustees, examiners, "responsible persons," or other fiduciaries that are or
01:i2313854.1
22 may be appointed in these chapter 15 cases under the Bankruptcy Code. The APA shall not be
subject to rejection or avoidance under any circumstances.
10. All persons and entities are prohibited and enjoined from taking any action to
adversely affect or interfere with the ability of the Foreign Representative to transfer the Assets
to the Purchaser in accordance with the APA and this Order.
11. The transactions contemplated by the APA are undertaken by the Purchaser in
good faith, as that term is used in section 363(m) of the Bankruptcy Code, and accordingly, the
reversal or modification on appeal-of the authorization provided herein of the Sale shall not
affect the validity of the Sale to the Purchaser, unless such authorization is duly stayed pending
such appeal.
12. The terms and provisions of this Order shall be binding upon and govern the acts
of any and all filing agents, filing officers, administrative agencies and units, governmental
departments and units, secretaries of state, federal, state, and local officials, and other persons or
entities which may be required by operation of law, the duties of their office, or contract to
accept, file, register, or otherwise record or insure any title or state of title in or to the Assets.
13. The failure specifically to include any particular provision of the APA in this
Order or any related agreements in this Order shall not diminish or impair the effectiveness of
such provisions, it being the intent of this Court, the Foreign Representative, and the Purchaser
that the APA and any related agreements are authorized and approved in their entirety, and in the
case of the APA and any related agreements, with such amendments thereto as may be made by
the parties in accordance with the terms and conditions of the APA and this Order.
14. The APA, and any related agreements, documents, or other instruments, may be
waived, modified, amended, or supplemented agreement Cinram International and the 1 by of Inc.
01:12313854.i
I 23 Purchaser, and in accordance with the terms thereof, without further order of the Court;
provided, however, that any such waiver, modification, amendment, or supplement does not
materially change the terms ofthe APA and does not have a material adverse effect on the
Debtors.
15. Nothing in this Order or the APA releases, nullifies, precludes, or enjoins the
enforcement of any liability to a governmental unit under police and regulatory statutes or
regulations that any entity would be subject to as the owner or operator of property after the date
of entry of this Order. Nothing in this Order or the Asset Purchase Agreement authorizes
transfer to the Purchaser of any licenses, permits, registrations, or other governmental
authorizations and approvals without the Purchaser's compliance with all applicable legal
requirements under non-bankruptcy law governing such transfers.
16. In the event that there is a direct conflict between the terms of-.this Order and the
APA, the terms of this Order shall govern and control.
17. All time periods set forth in this Order shall be calculated in accordance with
Bankruptcy Rule 9006(a).
18. Notwithstanding Bankruptcy Rules 6004(h), 6006(d), and 6006(g), this Order
shall not be stayed after the entry of this Order and shall be effective immediately upon entry,
and the Foreign Representative and the Purchaser are authorized to close the Sale immediately
upon entry of this Order.
01:12313854.1 —133
19. This Court shall retain jurisdiction with respect to any and all matters, claims,
rights, or disputes arising Rom or related to the Motions or the implementation or interpretation
of this Order.
Dated: 2012
UNITE D STATE B NKRUPTCY GE
01:12313854.1 25
This is Exhibit "D"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
A for Tking Affidavits Commissioner
JONATHAill ROSS EOGE a 'ommissioner, etc., Province of Ontario, while a Student-at-i.aw. Expires May 5, 2014. 135
Listed Closing Assigned Contracts
Cinram Parties Counterparties Agreement
Cinram International Inc. EMI Music Canada Manufacturing and Distribution Services Agreement (Canada}
Cinram International Inc. Universal Music Canada Inc. Manufacturing Agreement
Cinram International Inc. Take-Two Interactive Guaranty Software, Inc. and Jack Of All Games, Inc.
Cinram International Inc. nuBridges, LLC Software License Agreement
Cinram International Inc. KNAPP Logistics and Hotline Contract Automation, Inc.
Cinram International Inc. Computer Associates Canada License Agreement Ltd.
Cinram International Inc. Infor Global.So'tutions PRMS Software License Agreement
Cinram International Inc. Xerox Canada Ltd. Total Document Solutions Agreement
Cinram International Inc. Nugget Avenue (Phase I) Inc. Lease
Cinram International Inc. Macrovision Corporation Intellectual Property License for Macrovision's Technologies
Cinram International Inc. Matsushita Electric Industrial, Settlement and License Agreement Co., Ltd.
Cinram International Inc. DVD Format/Logo Licensing DVD Format/Logo License Corporation Agreement
Cinram International Inc. Rovi Solutions Corporation CopyBlock Letter Agreement
Cinram International Inc. Time Warner Inc. and Pioneer Pioneer Cross-License Acceptance Corporation and Assumption Agreement Cinram Parties Counterparties Agreement
Time Warner Inc. Pioneer Corporation Cross-License Agreement assigned to Cinram International Inc. per Pioneer Cross-License Acceptance and Assumption Agreement
Cinram International Inc. Sony DADC Austria AG Authorized Replicator Agreement
Cinram International Inc. G.N. Johnston Equipment Co Lease Agreement (Lease 0: Ltd.
6024'inram
International Inc. G.N. Johnston Equipment Co Lease Agreement (Lease 4: 6026, Ltd.
Cinram International Inc. G.N. Johnston Equipment Co. Amendment to Equipment Lease Ltd., Number 6072/4918) 'Lease
Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease 4: 685'4 Ltd.
Cinram International Inc. G.N. Johnston Equipment Co Lease Agreement (Lease 0: Ltd.
690.'inram
International Inc. G.N. Johnston Equipment Co Lease Agreement (Lease 0: 6906) Ltd.
Cinram International Inc. G.N. Johnston Equipment Co Lease Agreement (Lease 0-: 69'i0; Ltd.
Cinram International Inc. G.N. Johnston Equipment Co Lease Agreement (Lease 0 7200;: Ltd.
Cinram International Inc. G.N. Johnston Equipment Co. Amendment to Equipment Leas~;. Ltd. (Lease Number 7200/9053)
Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease 0: 7689) Ltd.
Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease 0: 7690) Ltd.
Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease 0: 7691) Lt.d. —137
Cinram Parties Counterparties Agreement Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:7762) Ltd.
Cinram International Inc. Manufacturers Life Insurance Employee Benefits Policy 901735 Company
Cinram International Inc. HR Technologies Sales Agreement
Cinram International Inc. HR Technologies Software Maintenance Agreement
Cinram International Inc. HR Technologies Hardware Maintenance Agreement
Cinram International Inc. PHH Vehicle Management Card Services Agreement Services Inc.
16110573 I This is Exhibit "E"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
A CommpSsioner fortiraking Affidavits
JONATHAN ROSS EOGE, a Commissioner,etc., proyiIceoi potaiip, wliile a Student+i-tsae. Expires May 5, 2O]4, 139
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re Chapter 15 4 CINRAM INTERNATIONAL INC., et al.,: Case No. 12-11882(KJC) Debtors in a Foreign Proceeding Jointly Administered
NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THK SALE OF SUBSTANTIAL ASSETS OF THE DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative. (the ",Foreign Representative" ) for the above-captioned debtors (collectively, the.".,Debtors" ), filed the Foreign Representative 's Motion for Entry ofan Order (I) Recognizing the Canadiari Sale Order, (II) Authorizing and Approving the Sale Free and Clear ofLiens, Claims, Encumbrances, and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief (Dkt. No. 9) (the "Motion" ) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PLEASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America.
PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 of the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801,on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.) Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M1B 2W3, Canada.
NYDOCS03/951443.6 the territorial jurisdiction of the United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser ~an of the executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assign a contract is subject to change by The Purchaser. Specificallv. among other thini s. the Purchaser has reserved all riehts with respect to removine anv executorv contract or unexpired lease from the Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list of the Assigned Contracts that were actulllv assumed and assigned to the Purchaser at closing with the Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you are a parfy4o an Assigned Contract listed on the Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. Ifyou have any questions about this Notice or the Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court: FTI CONSULTING, INC., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P.O. Box 104, Toronto, ON MSK 1G8 Canada, toll free at 1-855-718-5255, fax 1-416-649-8601, or email Cinramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Assumption Schedule to which you may be a party.
PLEASE TAKE FURTHER NOTICE THAT section 365(b)(1) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure., any defaults under executory contracts and unexpired leases at the time of their assumption. Accordingly, the Debtors have conducted a thorough review of their books and records and have
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the 1 Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease.
NYDOCS03/951443.6 determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Assumption Schedule.- Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of the Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at: www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335:"Alaska Ave., El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: http: //www.deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT the deadline for filing objections to the assumption and assignment of the Assigned Contracts and the associated cure amount listed in the Assumption Schedule is July 20, 2012 at 4:00 p.m. prevailing Eastern Time. Any objections must: (a) be made in writing; (b) conform to the Bankruptcy Rules, the Local Rules, and any orders of the Bankruptcy Court; (c) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the cure amount listed in this Notice that would resolve such objection; and (d) be filed with the Bankruptcy Court (contemporaneously with a proof of service) and served upon the following parties so as to be actuallv received by July 20, 2012 at 4:00 p.m. prevailing Eastern Time:
NYDOCS03/951443.6 SHEARMAN &. STERLING LLP YOUNG CONWAY STARGATT THE OFFICE OF THE UNITED Attn: Douglas P. Bartner, Esq. & TAYLOR, LLP STATES TRUSTEE FOR THE Attn: Robert Britton, Esq. Attn: Pauline K. Morgan, Esq. DISTRICT OF DELAWARE 599 Lexington Avenue Attn: Kenneth J. Enos, Esq. Attn: David Klauder New York, New York 1002Z Rodney Square 844 King Street, Suite Z207 Co-Counsel to the Foreign Representative 1000 North King Street Wilmington, Delaware 19801 Wilmington, Delaware 19801 Co-Counsel to the Foreign Representative
MORRIS, NICHOLS, ARSHT & WACHTELL, LIPTON, ROSEN BALLARD SPAHR LLP TUNNELL LLP & KATZ LLP Attn: Matthew G. Summers, Esq. Attn: Derek C. Abbott Attn: Richard G. Mason, Esq. 919 N. Market Street, 11th Floor 1201 North Market Street, 18th Floor Attn: Joshua A. Feltman, Esq. Wilmington, Delaware 19801 Wilmington, Delaware 19899 51 West 5Z'treet Counsel to the Proposed Purchaser Co-Counsel to the Debtors 'repetition New York, NY 10019 Secured Lenders and D/P Lenders Co-Counsel to the Debtors
Secured Lenders'repetition and DIP Lenders
PLEASE TAKE FUR%,'HER NOTICE THAT any counterparty to an Assigned Contract that fails to object timely to the proposed assumption or cure amount set forth on Schedule I will be deemed to have agreed to such assumption and cure amount without any further order of or action by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CONNECTION WITH THK SALE OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY (INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THK CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHER BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THK DATE THAT THK DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
NYDOCS03/951443.6 Dated: Wilmington, Delaware SHEARMAN & STERLING LLP July 6, 2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONA WAY STARGATT & TAYLOR, LLP
Is/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Representative
NYDOCS03/951443.6 5 144
SCHEDULE 1 TO THE CONTRACT ASSUMPTION NOTICE
Assumption Schedule
NYDOCS03/951443.6 wd Qac At 402
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(tab U MUih N IACAI II h dldd«it IIRAPA 0 Nlhlhl I IIdhylt u Dt u h Customer Contracts (Agreements)
397 Gnram International inc. Alliance Films Inc. Replication and Distnbution Sennces Agreement 121 glor Street East, Suite 1500 Toronto, SMXI Ontano M4HFSMS 398 Cinram international fnc Agiance Films Inc. Letter Agreement rei DVD Replication and Distribution Sennces 145 King Street East,3rd Floor, Toronto, $2.588,000.00 Agreement ON MSC 2Y7 399 Gnram international Ino Alliance Films inc. Letter Agreement re: DVO Replication and Oistnbution Services 145 King Street East, 3rd Floor, Toronto. $575,200.00 Agreement Addendum ON M 5C 2Y7
400 Cinram Internauonal in« Agiance Films inc Retail inventory Seneces Agreement 145 King Street East. 3rd Floor, Toronto, ON MSC 2Y7
401 Cinram International Inc. Alliance Films Inc. Transportation Rates and Sconce Agreement 145 King Street East $04IO 3rd Floor Toronto. ON MSC 2YT
402 Cinram International Inc Agiance Films inc letter Agreement re'ransportation Rates and Service Agreement 145 King Street East $0.00 3rd Floor Toronto, ON MSC 2Y7 403 Gnram International Inc EMI Music Canada Manufactunng and Oistnbuuon Services Agreement (Canada) 3109 American Drive $0.00 Mississauga, ON, L4V 182 404 Cinram International inc Universal Music Canada Inc. Manufactureig Agreement 2450 Victona Park Avenue, Wigowdale. 50.00 ON M2I 4A2 405 Clnram International Inc Universal Music Canada fnc Warehouse and Distribution Services Agreement 2450 Victoria Park Avenue, Wigowdale, SD.M ON M2I 4A2 406 Cinram Internationallnc. Universal Studios Canada Inc. Distribution Services Agreement Unit 31- 120 Dynamic Dr., Scarborough, ON M1V SCB 407 Gnram International Inc. Warner Home Video and Warner Bros. Amended and Restated Secunty Agreement 400 Warner Blvd., Burbank. California Entertainment Canada. 91522
408 Cinram Internauonal Inc. and Gnram Warner Home Video and Warner Home Video European Print Services Agreement 4MD Warner Blvd GmbH Germany Burbank, Cagfornla 91522 Attn. Clarusa Weirick, EVP 8 General Counsel
409 Clnram International Inc, Gnram Warner Home Video, Warner Home Video Distribution Services Agreement 4MO Warner Blvd. Manufactunng LLC, Cinram Benelux, Warner Home Video France, Warner Burbank, California 91522 Distnbution LLC, Clnram GmbH, Home Video Mexico S.A..Warner Home Video Attn: Clarissa Welrick, EVP lk General Gnram France 5 A 5, Cinram Optical UK, Warner Home Video Germany, Warner Counsel Discs 5 A 5, Cinram Operations UK Home Video Spain and Warner Bros Limited, Cinram Loystlcs UK Umlted, Entertainment Canada Gnram Latinoamencana 5 A de C.V and Gnram ibena 5 1
410 Cinram International inc„Gnram Warner Home Video, Warner Home Video UK Repgcation Services Agreement 4000 Warner Blvd. GmbH andCinram Operations UK and Warner Home Video Germany Burbank, California 91522 Umited Attn: Clanssa Weinck, EVP Ik General Counsel
411 Cinram International Inc, Cinram Warner Home Video, Warner Home Video Amended and Restated Security Agreement 4000 Warner Blvd SDIM Manufactunng LLC, Gnram Benelux, Warner Home Video France, Warner Burbank, California 91522 Distribution LLC, Cinram GmbH, Home Video Mexico S.A, Warner Home Video Attn. Clanssa Weirick, EVP & General Cinram France 5 A S.,Gnram Optical UK, Warner Home Video Germany, Warner Counsel. 1st Klnn, VP, Business & Legal Discs S.A.S,Cinram Operations UK Home Video Spain and Warner Bros. Affiars Limited, Cinrem Logistics UK Limited, Entertainment Canada Cinram latinoamencana 5 4 de C V, Cinram Ibena 5 L
412 Cinram Dlstnbution LLC, Cmram Warner Home Video, Warner Bras Settlement Agreement and Release 4000 Warner Blvd. $0.00 Manufactunng LLC, Cinram Entertainment Canada Inc., Warner Home Burbank, California 91522 International Inc, Cinram GmbH, Video Benelux, Warner Home Video France, Cinram France 5 A 5, Gnram Optical Warner Home Video UK, Warner Home Video Discs S.A.S.,Ceram Logistics UK Germany and Warner Home Video Spain limited, Cinram Operations UK Limited and Cinram Ibena 5 L
413 Cinram Manufactunng LLC Warner Home Video Subcontractor Non-Disturbance Agreement (Permined Ofgoad 4000 Warner Blvd. Parties) Burbank, Cabfornia 91522
414 Gnram International Inc., Cinram WEA International fnc. International Manufactunng and PP&5 Agreement 75 Rockefeller Plaza $0.00 GmbH, and Cinram Operations UK New York New York, 10019 Limited
415 Cinrarn International Inc, Cinram WEA International inc fnternational Transition Agreement 75 Rockefeger Plaza $0 00 GmbH, and Gnram Operations UK New York, New York, 10019 Limited
416 Cinram International Inc WEA International Inc Settlement Agreement 75 Rockeleger Plaza $0.00 New York, New York, 10019 152
Customer Contracts (Agreements)
1 No; ck(/apuyfpatty '.":: .,".'.'-"- counterparty.[ Address of Counterparty cure Ainount [I) 417 Gnram international Inc, Cinram Warner.Elektra-Atlantic Corporation US/Canada Manufacturing and PPBS Agreement 75 Rockefeller Plaza $0.00 M anufaciunng LLC, and G nrem New York, New York, 10019 Disuibution LLC
418 Cinram International Inc., Gnram Warner-Elektra.Atlantic Corporation US/Canada Transition Agreement 75 Rockefeger Plaza $04IO Manufactuding LLC, and Cinram New York, New York, 10019 Distnbution LLC
419 Clnramlnc and Cinram international TwentlethCentury fox HomeEntertainment DVD SerxlCea Agreement (Uvk and Canada) P.O. Bor 900 $0.00 Itic. Inc. and Twentieth Century Fox Home Beverly Higs, California 90213 Entertainment Canada Umited 1111Avenue of the Stars Los Angeles, Cakfornia 90067 attention, President, TCFHE-US Domestic Division, SVP, Operations, TCFHE.US Domestic Division and Legal Department
420 Cinram inc. and Cinram Internauonal Twentieth Century Fox ilome Entertainment Cassette Duplication and Product Olstnbution Services Agreement P.O Box 900 $0.00 lire Inc and Twentieth Century Fax Home (U 5 and Canada) Beverly Higs, Cabfornia 90213 Entertamment Canada Limited 2121 Avenue of the Stars Los Angeles, Cagfornia 90067 attenbon, President, TCFHE-US Domestic Owmon, SVP,Operations, TCFHE-US Domestic Division and Legal Department
421 Gnram international Inc, Cinram Tweiitieth Century Fox Home Entertainment OVDSenilcesAgreement [International) P O. Box 90D $0.00 Europe B.V.Cinram Optical Disc Iiic. Beverly Hdls Cagfornia 90213 5 A 5, Cinram GmbH and Cinram Operations U.K. Limited 2121Auenue of the Stare Los Angeles California 90067 anention, President, TcFHE-US Domestic Division, SVP, Operations, TCFHE-US onmestrc Dwisi on and Legal Department
411 Qnram International Inc, Cinram Twenbeth Century Fox Home Entertainment Cassene Duplication Services and Product Distnbution Services P O. Box 900 $0.00 Europe B.V., Cinram France Holdings Inc, Twentieth Century For Home Agreement(Europe) Beverly Hrgs„$ agfornla 90213 5 A, Cinram GmbH, Onram Entertamment 8 v, Twenueth century Fox Operations U K. Limited and Onram Home Entertainment France SA, Twentieth 1121Avenue of the Stars Logistics U K Limited Century Fox Home Entertainment Germany Los Angeles, California 90067 GmbH and Twentieth Century Fox Home attention, President, TCFHE-US Domestic Entertainment Limited Division, SVP. Operations, TCFHE-US Domestic Division and Legal Department
423 Cinram International Inc, Cinram Twentieth Century Fox Home Entertainment Non-Disturbance Agreement 2121Avenue of the Stars. Los Angeles, $000 International ULC, Cinram Inc and IHC LLC, among Twentreth Century Fox Home Cabiornia 90067, atten: Laura Cook corporauon, ceram (Us) Holding's Inc Entertainment Inc.
424 Cinram International Inc, Cinram Inc, Twentieth Century Fox Home Entertainment Access Agreement 2121Avenue of the Stars, Los Angeles, $000 Cinram Europe B.V, Cinram Optical LLC, Twentieth Century Fox Home Canada Cagfornla 90067, anen: Laura Cook Discs 5 A 5, Onram Operations UK Limited, Twentieth Century Fox Home B.V, Limited, Clnram Logistics UK Limited, Twentieth Ceutury Fox Home France SA, Onram GmbH and Cinram France Twentieth Century Fox Home Germany GmbH 5 A S. 425 Cinram International Inc. Twentieth Century Fax Home Entertainment New Business Commission Agreement 2121 Avenue of the Stars SD.OO LLC Los Angeles, Cakfornia 90067
426 Cinram Inc. Lions Gate Entertainment Inc, (acquued DVD Services Agreement 2700 Colorado Avenue $0.00 Artisan Home Entertainment Inc.) Santa Monica, CA 90404
427 Onram Inc RML Oistnbution Domestic, LLC Exclusivity and Loan Ayreement 8899 Beverly Blvd SD.OO Suite 510 Los Angeles, CA 90048
428 Cinram Inc Relativity Media, LLC Parent Guaranty 8899 Beverly Blvd $000 Suite 510 Los Angeles, CA 90048
429 Cmram Inc and Cinram Internauonal Twentieth Century Fox Home Entertainment Term Sheet 2121 Avenue of the Stars 50.00 Inc LI.C Los Angeles, Cakfornia 90067
430 Cinram Inc s)rd Cinram International Twentieth Century Fox Home Entertainment Term Sheet 2121 Avenue ofthe Stars $0.00 Itic LLC Los Angeles, Cahfornia 90067 431 Cinram Inc and Cmram International Twentieth Century Fox Home Entertamment Term Sheet 2121 Avenue of the Stars 50 00 itic, LI.C Los Angeles, California 90067 Customer Contracts (Agreements)
432 Cinram Oistnbution LLC Gaiam Americas, Inc. Inventory Management Services Agreements 833 W South Boulder Road louisville, CO 80027 Attn Davis Haik Director, Corporate; copy: Bill Sondheim. President Gaiam Americas. Inc.
350 Madison Avenue 17th Floor New York, NY 10017 copy Jonathan Lieberman, Esq. Vice President Buuness 8 Legal Affairs Gaiani Amencas, Inc 350 Madison Avenue 17th Floor New York, NY 10017
433 Cinram Retail Seneces LLC Gaia m Amerrcas, Inc. Retail inventory Services Agreement 350 Madison Avenue New York, Ny 10017
434 Cinram Oistnbution LLC PopCap Games tnc. Inventory Management Services Agreement 2401 4th Avenue Suite 810 Seattle, WA 98121 Anni Mr. Dennis Ryan
copy;PopCap Games, Inc 2401 4th Avenue, Suite 810 Seattle, WA 98121 Ann General Counsel
435 Cinram Distribution LLC Best Buy Purchasing LLC Inventory Management and Retail Dutnbution Services 7601 Penn Avenue South Agreement Richfield, MN 55423 Attn. VP Logistics Planning CC VP Logistics Transportation
436 Clnram Distribution LLC Best Buy Purchasing LLC , Network Access Agreement Attn General Counsel 7601 Penn Ave So. Richfield, MN 55423
437 Cinram Distnbubon LLC Ubisoft Inc Inventory Management Services Agreement 625 Third Avenue San Francisco, CA 94107 Attn: Linda Stackpoole 438 Clnram Distnbution LLC Sears Roebuck and Co, Kmart Corporation Inventory Management Services Agreement 3333 Beverly Road Hoffman Estates, JL 60179 Aun SVP, Suppfy Chain 8 Director, tnventory Management
copy: Sears Holdings Management Corporation 3333 Beverly Road Hoffman Estates, IL 60179 Attn. General Counsel
439 Clnram Manufacturing LLC Watchtower Bible and Tract Soaety of New Letter Agreement 25 Columbia Heights York, I it c. Brooklyn, N Y 11201-2483
440 Cinram Retail Services LLC Electronic Arts Inc, Retail Inventory Services Agreement 209 Redwood Shores Parkway Redwood City, CA 94065
441 Onram Distnbution LLC Take-Two Interactive Software, Inc and Jack Inventory Management Services Agreement 622 Broadway Of All Games, Inc. New York, NY 10012 Altn Chief Executwe Officer
copy Take-Two Interactive Software. Inc. 622 Broadway New York, NY 10012 Attn Legal Department
442 Cinram Oistrlbuuon LLC Wells Fargo Capital Finance and Take-Two Bailee Agreement One Boston Place Interacuve software, Inc 18th Floor Boston, Massachusetts 02108
443 Cinram International Inc Take-Two Interacbve Software, Inc Inventory Management Services Agreement 622 Broadway New York, New York 10012
444 Cinram Internatronal Inc Take.Two Interactive Software, Inc and Jack Guaranty 622 Broadway Of All Games, Inc New York, New York 10012 Customer Contracts (Agreements)
i
Address of counterpany 'Cure Amount [2) 445 Cinram Oistnbution LLC Sega of Amenca Inc Inventory Management Sennces Agreement 350 Rhode island Street $0 oi1 Suite 400 San Franosco, CA 94103 I Attn. Mr. Thomas P. Dudley
copy SEGAofAmenca,inc 350 Rhode Island Street, Suite 400 San Francisco, CA 94103 Attn: Director of legal
446 Cinram Oistnbution LLC Namco 8 and a i Games America Inc Inventory Management Services Agreement 4555 Great America Parkway, Suite 201 Santa Clara, CA 95054 Attn( lennifer Tersigni
Copy: NAMCO BANOAI Games America lit C. 4555 Great America Parkway, Suite 201 Santa Clara, CA 95054 Attn Legal Dept
447 Clnrarn International Inc Take-Two Interactive Software, Inc. Letter of Intent Concerning Canada Transportation Services 622 Broadway New York, NY 10012
448 Ditan Distnbution LLC OfficeMax Incorporated Third Party Delivery Agreement 263 Shuman Blvd 50 00 I Naperville, IL 60563
449 Cmram Manufacturing LLC Rodale Inc Terms of Service Agreement 400 South 10th Street C 0 Emmaus, PA 18098
450 Cinram Manufactunng LLC Simon Ik Schuster Audio, a dwision of Simon 6 Terms and Conditions of Services 1230 Avenue of the Amen cas 50 PO Schuster,fn«, New York, NY 10020
I 451 Cinram Outnbution LLC 505 Games (US), Inc. Inventory Management Services Agreement 5008 Chesebro Road 5(i 00 I" Agoum Hills, CA 91301 Attn Claudla Cavana Manager of Operations and Corporate Liaison
452 Cinram Distribution LLC Arts Alhance America, Inc. Inventory Manage ment Services Agreement 304 Hudson Street 7th Floor New York, Ny 10013 Attn: Mr. Thomas O'ara, CFO
453 Cinram Olstnbutlon LLC Alhance Distnbutors Holding Inc. Inventory Management Services Agreement 1160Commerce Avenue Bronx, Ny 10462 Attn lay Gelman. CEO
copy( Law Ofbces of Oscar Folger 521 Fifth Avenue New York, NY 10175 Attn: OscarFolger,Esq
454 Cinram Distribution LLC ASPYR Media, Inc inventory Management Services Agreement 2404 Rio Grande sn,n Ausun,TX 78705 Attn Mr. Michael Rodgers, President;
copy PO Box 5861 Austin, TX 78763 Attn Michael Blair
455 Onram Distribution LLC Atari, Inc. Inventory Management Services Agreement 417 Fifth Avenue 5(1 00 New York, NY 10016 Ann'ob Spellerberg
copn Ate(I, Itic 417 Fifth Avenue New York, NY 10016 Ann: Legal Counsel
456 Onram Distnbution LLC Cerrdian Stored Value 5oluuons, Inc Inventory Management Services Agreement 101 Bulktt Lane 50.00 Louisville, KY 4D222 Attn GeneralManager
457 Cinram Oistributmn LLC CodeMasters, Inc Ii mentary Management 5ervices Agreement 10 Universal City Plate, Suite 2400 $0.00 Universal Oty, CA 91608 Attn: Mr Geoffrey H Mvlhgan, President
458 Cinram Distribution LLC Company X Accessones, LLC Inventory Management Services Agreement PO Box372 $0.00 Ambler, PA 19002 Attn Mr Matt Segal
459 Cinram Distnbution LLC D3Publisher oi America, Inc Inventory Management Services Agreement 2615 Paofic Coast Highway, Suite 225 $000 Hermosa Beach, CA 90254 Attn Ms CathyT(ache,VPSalesand Marketing Customer Contracts fAgreements)
460 Cinram Distribution LLC OR globalTech, Inc. inventory Management Services Agreement D!Iglobaltech, Inc $0.00 27081 Aliso Creek Road, Suite 100 Aliso Viejo. CA 92656 Auns Sr. Drrector of Operations
copy DR globalTech, Inc. 9625 West 76th Street Eden Prairie, MN 55344 Attn: Kevin Crudden, Vice
461 Onram Distribution LLC OreamCatcher Interteractive, Inc Inventory Management Services Agreement 5000 Duflerin Street -Budding 8 $000 Toronto, Ontano M3H STS Canada Attn Ms. Paula Raposo
462 Onram Distribution LLc GameStop,inc fnventory Management Servrces Agreement 2250 William D Tate Avenue $000 Grapevine, Texas 76051 Attn Ms. Angel Sohn
463 Clnram Distnbutlan LLC Genius Praducts. LLC Inventory Management Services Agreement 3301 Exposition Blvd. S000 Santa Monica, CA 90404 Attn Senior Vice President, Operatrons
copy Genius Products, LLC 3301 Expasition Blvd Santa Monica, CA 90404 Attn; SVP. Busmess and Legal Affair and SVP/Senior Corporate Counsel
464 Cmram Distribution LLC Goodbetterbest Ltd. Inventory Management Services Agreement Devonshire Business Centre. Works Road Letchworth, Herts SG6 1GI United Kingdom Attn Chns Berhelat, SVP of Sales and Marketing. North Amenca
465 Clnram Distrlbutlan LLC Hastings Entertafnment, Inc Inventory Management Services Agreement 3601 Plalns Blvd. $0.00, Amango, TX 79012 Attn: Robert Dram. Director af Interactive
466 Cinram Distnbution LLC Ignition Entertainment Ltd. Inventory Management Services Agreement 500 N. Central Avenue, Suite 930 $0,00 Glendale, CA 91203 Attn'fay Chadha President
v capyi Mel Schu(maa, Esq 31304th Avenue -5wte 103 San Diego, CA 92103
467 Cmram Distributwn LLC KOEI, Inc Inventory Management 5ervices Agreement 29863 Santa Marganta Pkwy .Suite 100 $0.00 Rancho Santa Marganta, CA 92688 Attn. Matthew Scott, President
468 Cinram Dlstnbution LLC LucasArts, a dlirlslan af Lucasfgm Inventory Management Services Agreement 1110Gorges Avenue , $0.00 Entertarnment Carnpany Ltd. San Francuco, CA 94129 Attn: Evelyne Boging
469 Cinram Oistrhution LLC Macy's Corporate Services, Inc. fnventory Management Servfces Agreement 7 West Seventh Street Cincmnatf, Oh 45202 Attn Robert G Crabtree
470 Cinram Dutrlbutlon LLC Maglx AG Inventory Management Services Agreement Rotherstrasse 19 $0.00 10245 Berlin, Germany Attn: Mr. Iurgen laran
copy: MAGIX AG Michael Nl arm ann General Manager One Vageywaod Dr. 4302 Markham, ON 13R SL9 Canada
471 Cinram Distrrbutian LLC Magnofia Home Entertainment Inventory Management Services Agreement 2222 South Barrrngton Avenue $0.00 Los Angeles, CA 90064 Attn Randy Wells, Attn Gabe Monterrubra
472 Cinram Distnbution LLC Mastiff, LLC Inventory Management Services Agreement 2762 Octavia Street —Suite 8 $0.00 San Fran«uco, CA 94123 Attn Mr WdgamSwant
473 Cinram Distnbution LLC NC Soft Interactive Inventory Management Sennces Agreement 6801 N. Capita I of Texas Hwy. Bugdlng 1.Suite 102 Austin, TX 78731 Attn. Mr Michael Grajeda, CFO
474 Cinram Distnbution LLC NIS America, Inc Inventory Management Services Agreement 1221 East Oyer Road, Suite 210 $0.00 Santa Ana, CA 92705 Attn: Iohanna Hirota Customer Contracts (Agreements)
475 Cinram Distnbution LLC O-Games, In« Inventory Management Services Agreement 2015 Birch Avenue 50 00 San Carlos, CA 94070 Attn. Greg lant, General Manager
476 Cinram Dutribution llC Orchard Enterpnses NY, Inc Inventory Management Services Agreement 100 Park Avenue —2nd Floor TVT d/b/a Distnbution New York, NY 10017 Attn: Mr Paul Raimer 477 Cmram Distnbution lLC Pioneer Distnbutors, Inc. Inventory Management Services Agreement 15355 Raymer Street 50 00 Van Nuys. CA 91406 Attention. Mr. Ben Nabati, Partner
478 Cinram Distnbution LLC Porchlight Entertainment Inventory Management Services Agreement 11050Santa Monica Blvd., 3rd Floor 50 00 Los Angeles, CA 90025 Atn Garry Jones, Sr. VP /Jeff Gonralei. CFO
479 Cinram Distnbution LLC Pnme Games, Inc. Inventory Management Services Agreement 3000 lava Ridge Court Roseville, CA 95661 Attn Mr. Mark Hughes
480 Cinram Distnbutlon LLC SNK PLAYMORE USA Corporation Inventory Management Services Agreement 1720 Highway 34 50,00 PO BOX 1140 Wall. NJ 07719 Attn: BenHerman,President
481 Cinram Distribution LLC Sony Onhne Pniertainmcnt LLC Inventory Management Services Agreement 8928 Terman Court 51i; San Diego, CA 92121 Attn; Mr Phil Tish copy: Office of General Counsel
482 Qnram Distnbutlon LLC Southport Music Box Corporation inventory Management Services Agreement 942 West Lake Street 50 00 Chicago, IL 60607 Attn. Scott Luke
483 Cinram Distribution LLC Square Enlx LLC Inventory Management Services Agreement 999 N. Sepulveda Blvd, 3rd Floor )0 ii Los Angeles, CA 90045 Aluu Mr RO11 Kun&
484 Cinram Distnbution LLC Starbucks Coffee Company Inventory Management Services Agreement 2401 Utah Avenue South, Suite 800 Seattle, WA 98134 Attn Mce President of SCO Operations
485 Cinram Distnbution LLC Strategy First,inc. Inventory Management Services Agreement 1475t PaulWesF,Suite300 Montreal, Quebec, Canada H2Y 125 Attn: President
copy: Silverstar Holdings, Ltd 6100 Glades Rand, Suite 305 Boca Raton, FL 33434 Attn: Clive Kabattnlk, President & CEO
486 Cinram Dlstnbution LLC Toys "R" Us, Inc. Inventory Management Services Agreement One Geoffrey Way Wayne, NJ 07470 Attn. Senior Director of Logistics
Copy: Toys "R" Us, Inc One Geoffrey Way Wayne, Ni 07470 Attn General Counsel 487 Onram Dlstnbution LLC Transworld Entertainment Inventory Management Services Agreement 38 Corporate Circle 1I Pi Albany, NY 12203 Attn Corporate Controller
copy: Transworld Entenainmenl 38 Corporate Circle Albany, NY 12203 Attn Legal Department
488 Cmram Distnbution LLC U &i Entenainment Inventory Management ServicesAgreement 4528 France Avenue South 50 00 Minneapolis, MN 55410 Attn ManyHawk
489 Cinram Distribution LLC Xseed JKS, Inc. Inventory Management Services Agreement XSeed Marketing, Inc 5i1 00 23001 Hawthorne Boulevard, Suite 205 Torrance, CA 90503 Attn Mr Sean Montgomery
copy Xseed JKS, Inc Xseed Marketing,inc 23001 Hawthorne Boulevard, Suite 205 Torrance, CA 90503 Ann Mr Ken Berry Customer Contracts (Agreements)
" 'rk"-:"'ltie'af M ou ..;.%ewE'&v.',,ii.- d .:.uz",,fvd Awrfdrenswaf corfintermaity:.; ."~1 -, .- clue Afiicumt(1) „,„ Ffo ", eh(ms)m partyy ' i'.'c"'~ "'„'i coiiiiterimtty) ':.,')Dp':- ',:.. A)(segment( fc:, Agreement 625 Second Avenue, 1st Floor So.oo 490 LSnram Dlstnbution LLC New2oom, Inc. Inventory Management Seneces San Frandsco, CA 94107 Attn. Mr. Man Confer, VP, Finance
Agreement 2615 Paafic Caast Highway, Suite 225 491 Onram Distribution LLC Deep Silver Inventory Management Services Hermosa Beach. CA 90254 Attn: Ms. Cathy Tlsche, VP Sales and Marketing
29863 Santa Margarita Suite 100 492 Cinram Dfstrlbuuan LLC Little Orbit, LLC Inventory Management Services Agreement Pkwy . Ilancho Santa Margarita, CA 92688 Attn; Matthew Scott, President
455 ST ANTOINE W., STE3DO, Montreal, QC 493 Cinram Inc. MAPLE PICTURES CORP Customer Terms and Condiuons H22 Lll Atten. Accounts Payable
Agreement 9100 WILSHIRE BOULEVARD 50.00 494 Cimam Manufactunng LLC EM PRODUCTIONS LLC Inventory Management Services BEVERLY HILLS CA 9D212
Agreement 23340 NORTHBROOK lANE Valenaa, CA 495 Cinram Manufacturing LLC RED-JAM LLC Inventory Management Services 91355
Agreement 23340 NORTHBROOK fANE Valencia, CA 496 Cinram Manufacturing LLC REDWIND PRODUCTIONS Inventory Management Services 91355
902 Broadway 497 Cinram Retail Services LLC New Video Group. Inc Retail Inventory Servrces Agreement New York, NY 10010
145 King Street East 498 Clnram Retalt Services LLC AOlance Films, Inc Retail Inventory Services Agreement Suite 300 Toronto. Ontano MSC 2Y7
Agreement 200D Avenue of the Stars $0.00 499 Onram Retail Services LLC Mioemum Media Servl«es, LLC Retail Inventory Services Suite 350 U)s Angeies. CA BO067
375 Hudson Street 500 Onram Retag Services LLC Penguin Group (USA) Inc Letter of fntent New York. Ny 10014
AGREEMENT 500 5 BENUA VISTA STREET 501 One K Studios LLC DISNEY INTERACTIVE MEDIA GROUP SERVICES ATTN. LEGAL OET)T Burbank, CA 91521
1201 FLOWER STREET g0.00 502 One K Studios LLC DISNEY PUBLISHING tndependent Contractor Agreement Attn Julia Blare Birot Gendale, CA 91201
AGREEMENT 1100 AVENUE OF THE AMERICAS go)00 503 One K Studios LLC HBO HOME ENTERTAINMENT PRODUCTION SERVICES Attn. SVP, Business Affairs New York NY10036
AGREEMENT 5555 Melrase Avenue $0.00 504 One K Studios LLC PARAMOUNTHOME ENTERTAINMENT RESULTS OF PROCEEDS ATTN Redkch Richard Hogywoad CA 90038
350 N. Glenoaks Blvd. 505 One K Studios LLC AMERICA STAR MEDIA, LLC (aka Morningstar) Graphic Designer Agreement Suee 30O Burbank, CA 91502
(1]The Cure Amounts set forth in this schedule are sublect to downward adlustment by the Debtors far the following Its the date of assumption; (I) any credits. rebates and other amounts due to the Debtors and their affigates by the Contract Counter-Party and afoliates as of date entry of the CCAA Initial Order; and (e) all amounts paid by the Debtors after June 30, 2012 on account of amounts owing to the Contract Counter-Party or its affiliates on the of and June 2012 and the estimates for such periods used for the esbmation of the Cure Amounts (~i) differences between the amounts actually incurred by the Debtors for the months of May IT Contracts
506 Cinram Ltd. Harbinger Software Schedule No. 1291915Qwith the Terms and 1000 Campus Drive Ann Arbor $0 00 Conditions of the Master Software Ucense Michigan 48104-6700 Agreement No. MMX041600CLX
507 Cinram Ltd. Peregrine Connectivity, Inc. Software Schedule No. 1385805Qwith the Terms and Parkway 400 $0 00 Conditions of the Master Software License 1277 Lenox Park Blvd Agreement No. MMX081600CXX Atlanta, GA 30319
508 Cinram Ltd Inavis USA, fnc Product Schedule A No. MSX063004CIXV01 with the Parkway 400 $0.00 Terms and Conditions of fnovis USA, Inc Software 1277 Lenox Park Blvd. Ucense Agreement SLA-US-063004CLXV01 Atlanta, GA 30319
509 Cmram international, Inc Inovis USA, Inc. Inavis Order Farm with the Software License Terms & Suite 100 $0 oo Condmons Parkway 400 11720AmberPark Drive Alpharetta, GA 30009-2271
510 Gnram International nuBridges, Inc. Schedule No. 3 to nuBridges Master License 1000 Abernathy Road $195 29 Agreement Suite 250 Atlanta, GA 30328
511 Cinram International inc nugndges, LLC Software License Agreement 1000 Abernathy Road included In Contraa in Suite 250 510 above. Atlanta, GA 30328
512 Vision Information Services iSoft Corporation Schedule to iSoft Corporation Master License 15303 Oagas Parkway So oo Agreement Suite 1110 Addison, Texas 7501
513 Gnram Manufacturing, LLC 170 Systems, inc. Conterminus Software Support Amendment (License 36 Crosby Dove $0 oo Schedule No 2 to the Master Software License and Bedford, MA 01730 Professional Service Agreement)
514 Cinram International inc. KNAPP Logistics and Automation, Inc Hotline Contract 659 Henderson Drive $0 oo
Suite I Cartersville, GA30120
515 Cmram international, Inc. Salvair, LLC Software License Agreement 180 W. Mohawk Drive So ooj Poweg, OH 43065
516 Cinram International Inc. IBM Canada Ltd. Statement of Work far Services 3600 Steeles Avenue East $6,415 08 Markham. Ontario l3R 927
517 Cmram Manufactunng Oracle USA, Inc. Oracle License and Service Agreement 20 Davis Drive i&o Belmont, CA 94002
518 Cmram Inc Defi Computer Corporation Dell Extended Services Detads One Dell Way So ni RR1 Madstop 8035 Round Rock, TX 78682
519 Oitan Corporation Kewill Addendum 8062107 to Kewig Software License and 100 Nickerson Road, Marlborough, $0 oo Service Agreement MA 01752
520 Ditan Corporation Miracle Software Systems, Inc. Master Service Agreement 45625 Grand River Ave. 50 oo Novi, Ml 48374 521 Cinram Inc KNAPP Logistics and Automation, Inc. Invoice No. 116229 2124 Barrett Park Dnve $0 oo Suite 100 Kennesaw, GA 30144
522 Cinram Manufacturing ASK 2012 IBM Maintenance Renewal 3125 Sovereign Dove, Suite 98, So 00 Lansing, Ml, 48911 523 Cinram International inc. IBM Canada Ltd. IBM Statement of Work for Services PO Box 5100 Included in Contract No. Stn. F 516 above. Toronto, Ontano M4y 2TS 524 Gnram Manufactunng Inc KNAPP Logistics and Automation, inc. Invoice No. 116236 2124 Barrett Park Drive $000 Suite 100 Kennesaw, GA 30144
525 Cmram Manufactunng Oracle Amenca, Inc Invoice No 41424930 PO Box 44471 $0.00 San Franasco, CA 94144
526 Cinram Manufactunng Oracle America, Inc Invoice No 41424928 PO Box 44471 $0.00 San Francisco, CA 94144
527 Gnram Manufactunng Oracle America, Inc. Invoice No. 41515643 PO Box 44471 $0 00 San Francisco, CA 94144
528 Gnram Manufactunng Ora«le America, Inc. Invoice No. 41424929 PO Box 44471 $0.00 San Francisco, CA 94144 IT Contracts
529 Cinram Manufacturing Oracle America, Inc. Invoice No 41424927 PO Box 44471 $0.00 San Francisco, CA 94144
530 Cinram Manufactunng Oracle America, Inc Invoice No. 41515832 PO Box 44471 $0.00 San Fmnasco, CA 94144
531 Cinram Inc Rand McNally & Company Rand McNally & Company Mdemaker Resident 8255 N Central Park AS/400 On Demand Skokie, IL 60076
532 Ditan Distribution SAP Amenca Amendment No. 5, Amendment No. 2 to Software 2400 Main Street Extension License Agreement Suite 3 Sayrevige, New Jersey 08872
533 Ditan Dutnbution, LLC SAP America, Inc Invoice No. 6008184924 as of 12/01/2010 3999West Chester Pike So.oo Newtown Square, PA 19073
534 Ditan Distnbution, LLC SAP Amenca, Inc. Invoice No. 600818925 as of 12/01/2010 3999 West Chester Pike So.oo Newtown Square, PA 19073
535 Ditan Distdibubon, LLC SAP America, Inc. Purchase Order No. CORP-010208F-IT 3 Van De Graaff Dnve 4th Fl Burbngton, MA 01803
536 Ditan Distribution, LLC SAP Amenca, Inc. invoice No 6008184927 as of 12/01/2010 3999 West Chester Pike $0.00 Newtown Square, PA 19073
537 Cinram International, Inc/ SMC "3 Agreement for receipt of Czartite and/or Canadabte 500 Westpark Dnve $78.90 Data in Logibty's Propnetary Format for use through Suite 300 the Varsity Logistics System Peachtree Qty, GA 30269
538 Cinram International Inc. Sterling Commerce Managed Service Agreement (Canada) Brunswick House So.oo Sate 1000 44 Chipman Hig PO Box 7289 Postal Station A Samt John, NB Canada E2L 456
539 Cinram Distribution LLC Sterhng Commerce (America), inc Assignment Agreement PO Box 73199 So.oo, Chicago, IL 60673
540 Ditan Distnbution LLC Sterling Commerce (Amenca), Inc. Amendment K to Software License Agreement PO Box 73199 So.oo Chicago, IL 60673
541 Ditan Corporation Sterkng Commerce (Amenca), Inc Amendment H to Software License Agreement PO Box 73199 So.oo Chicago, IL 60673
542 Vision Info Services Unicorn Systems, Inc. Invoice 8 12002052 15535 San Fernando Mission Blvd. Mission Hills, CA 91345
543 Cinram, Inc. Varsity Logisbcs, Inc. Master Ucense and Maintenance and Support 185 Berry St :Sonoo: Agreement for Software and Related Documentation Suite 3500 San Francisco, Cakfornia 94017
544 Vision Information Logistics Potix Corporation Quotation Noz SQ1105410 11F-2, lilo. 87 $0,00 Xhengzhou Road Taipei, Taiwan
545 Cinram API Digital Acknowledgment 1821 University Dnve Sti480.00 Huntsville, AL 35801
546 Cinram API Digital Acknowledgment 1821 University Dnve So.oo Huntsville, AL 35801
547 Cinram Converged Resource Integrators, LLC Support Agreement 197 Cahaba Valley Parkway $0.00 Pelham, Alabama 35124
548 Cinram Inc./ Cinram Distnbutio iFax Solutions, Inc. Pre-Inadent Support Agreement 160 Levermgton Ave $0.00 Suite 102 Philadelphia, PA 19127
549 Cinram ParkPlace International Maintenance Service Agreement - Equipment List 8401 Chagnn Road Included in Contract No. Chagrm Falls, OH 44023 560 below.
550 Manhattan Assoaates WEA Corporation Oracle Database Addendum 111N. Hollywood Way $0.00 Burbank, CA 91505-4356 IT Contracts
551 Manhattan Associates WEA Corporation Purchase Order No. Ho-21642 111N. Hogywood Way $0 00 Burbank, CA 91505-4356
552 Manhattan Associates WEA Corporation Purchase Order No. Ho-22302 111N Hollywood Way $0 00 Burbank. CA 91505&356
553 Manhattan Assoaates WEA Corporation Purchase Order No. HO-26320 111N. Hollywood Way So.oo 8urbe nk, CA 91505-4356
554 Cinram International Ltd Pansophic Systems of Canada, Ltd. Assignment Agreement Between SSA Global Canada 6711 Mississauga Road So oo Inc, Cinram International Inc., Media Motion 8 V, Suite 601 and SSA Global Technologies Inc. Mississauga, Ontario LSN 2W3
555 Cinram International Inc. Computer Assoaates Canada Company Amendment Number 1to the Pansophic Systems of 5935 Airport Road $0 00 Canada, Ltd. Software License Agreement dated July Mississauga, Ontario L4V 1WS 31, 1990by and between Computer Assoaates Canada Company and Cinram International inc.
556 Onram Ltd. Pansophic Systems of Canada, Ltd. Software I.icense Agreement 6711Mississauga Road, Suite 601, $0 00 Mississauga, Ontario LSN 2W3
557 Cinram International lnc. Computer Assoaates Canada Ltd. License Agreement 5935 Airport Road, Mississauga, Ontano L4V 1W5
558 Cinram Manufacturing Carousel Industries of North America Business Partner Temporary or Permanent Login 659 South County Trail $2,osg Request For Ayava Definity or Audix System Access Exeter, Rl 02822
3'59
Cinram Manufacturing Oracle Ordenng Document (Service Contract 9 2814365) PO Box 71027 50 00 Chicago, IL 60694-1028
560 Cinram Manufacturing Park Place Technologies Maintenance Service Agreement 8401 Chagrin Road $1,328 '3 Cleveland, OH 44023
561 Cinram Manufacturing Park Place Technologies Maintenance Service Agreement 8401 Chagrin Road Includi.din Contr~et No Cleveland, OH 44023 560 above.
562 Cinram Manufacturing symantec Essential Support Certificate 2300 Stevens Creek Blvd. Cupertino, CA 95014
563 Cinram Manufacturing Park Place Technologies Maintenance Service Agreement- Equipment List 8401 Chagrin Road Includedln Contra No Cleveland, OH 44023 560 above.
564 Cinram Manufacturing Park Place Technologies Maintenance Service Agreement - Equipment List 8401 Chagrin Road fncluded in Contra Cleveland, OH 44023 560 above
565 Cinram Manufactunng LLC Aspera,inc Endqfser License Agreement for Aspera Software 5900 Hogis St. Suite E. $0 00 I Emeryvige, CA 94608
566 Cinram Manufactunng LLC Carousel Industries Maintenance Coverage Support Speafication- PD Box 849084 $0 00 Attachment A Boston, MA 02284-9084
567 Cinram Manufacturing LLC CDW Direct Sales Quotation 200 North Mdwaukee Ave $2,075 io Vernon Hills, IL 60061 568 Cinram Manufacturing Websence, Inc. Websense Subscnption Confirmation for Key 10240 Sorrento Valley Rd 50 00 PBNH7KBJ6PCTJC2A San Diego, CA 92121
569 Cinram Manufactunng Oracle Ordenng Document (Service Contract g. 2771607) PO Box 71027 $0 00 Chicago, IL 60694-1028
570 Cinram Manufactunng symantec Renewal Contract (Renewal ID. RNW548-716-754) 350 Ellis Street $0.00 Mountain View, CA 94043
571 Cinram International inc. Diversified Information Technologies, Customer Agreement 1043 Gerrard St. East $2,051 57 Inc Toronto, Ontario, M4M127
572 Cinram Manufactunng Frontier Dedicated Internet Access ("DIA") and Managed 100 CTE Drive $56,785.75 Router (applicable to Frontier Service Agreement) Dallas, PA 18612
573 Cinram Manufactunng LLC Frontier Dedicated Internet Access ("DIA") and Managed 101 CTE Dnve $0.00 Router (applicable to Frontier Service Agreement) Dallas, PA 18612
574 Onram Manufacturing, LLC globalscape Globalscape Order Details (Invoice 1157724) 4500 Lockhill-Selma $0.00 Suite 150 San Antomo, TX 78249 IT Contracts
~:,' .n:"2 'Cki'I'ajn!paii'ty,-.:, '..:,':: .;," Cozuot'et)xssrtji:;-' '-'8:: -:::,;;":.::::;;.jr';;TII(e'oFABJ'reuesme'nt.,,",-',,:;-I;."';; 5: (I'i".,i'„; .Zl ':-';-;-;" Afd'tes'oif Cfoucrsteipa'ity!.'" f:Cuzr'e Alit'ounkp$ : ?-"„:: 575 Cinram inc. IKON Financial Services Image Management Amendment PO Box 9115 $13,774.09 Macon, GA 21308-9115
5/6 Cinram Inc. IKON Financial Services Image Management Product Schedule PO Box 9115 Included in Contract No. Macon, GA 21308-9115 5'75 above
577 Cinram Manufactunng IKON Office Solutions Financials Based on a new 18 Month Agreement 70 Valley Stream Pkwy. Induded in Contract No, Malvern, PA 19355-1453 57S above
578 Cinram Manufacturing LLC The Pythian Group Contract Agreement (amendment to Service 1200St. Laurent Blvd. $9,05940 Agreement for Database Administration Services) Suite 261 (PO Box 207) Ottawa, Ontadio KLK 388
579 Cmram Manufactunng aspera Invoice INASP606 5900 Hogis Street $0.00 Suite E Emeryvige, CA 94608
580 Cinram Park Place Technologies Park Place Maintenance Service Agreement Renewal 8401 Chagrin Road In'eluded in Cdntract No. Cleveland, OH 44023 560 above,,
581 Cinram Manufactunng LLC Symantec Corporation Purchase Order 8286021 20330 Stevens Creek Blvd. $0.M Cupertino, CA 95014
582 Cinram Manufactunng Oracle Support Services Ordering Document - Renewal PO Box 71027 Chicago, IL 60694-1028
583 Cinram Manufactunng LLC Warner Music inc. Bill of Sale 75 Rockefeger Plaza $0.00 New York. NY 10019
584 Cinram International Inc. Infer Global Solutions PRMS Software License Agreement 555 Brierwood Circle $o.oo Ann Arbor, Ml 48108
[1)The Cure Amounts set forth in this schedule are subiect to downward adlustment by the Debtors for the following: (i) any credits, rebates and other amounts due to the Debtors and their affiliates by the Contract Counter-Party and its affiliates as of the date of assumption (n) all amounts paid by the Debtors after iune 30, 2012 on account of amounts owing to the Contract Counter-Party or its affiliates on the date of entry of the CCAA Initial Order; and (iii) differences between the amounts actually incurred by the Debtors for the months of May and June 2012 and the estimates for such periods used for the esumation of the Cure Amounts Supply Contracts
No.„- Ctnrvm'Party.,' ",';".". "'.Couhterpasty:".".","...'-":', ",.'-,"„'-.'(de'/sf Agreeevrnent' „:,*-: Addre'ssp~fCouritdrpvarty ''-' 'ure Atnount(2) ',"'85 Cinram Manufacturing LLC PPL EnergyPlus, LLC Retail Electricity Agreement Two North Ninth Street $553,293 46 Allentown, PA 18101-1179
586 Cinram Manufacturing LLC PPL EnergyPlus, LLC Retail Electncity Agreement Two North Ninth Street Allentown, PA 18101-1179
587 Cinram, Inc. Ambassador Temporary Staffing Services Agreement 15068 US Highway 19S $62,817A1 Thomasville, VA 31757
588 Cinram International Inc. Klass Security and Investigations Inc. Security Services Agreement (Canada) 40 Production Drive $10,941.52 2nd Floor Toronto, ON M1H 2XB
589 Cinram IK Guardian Security Services Inc Secunty Services Agreement November 1, 3300 West 127th Street, $11,85845 2010 Blue island, IL 60406
590 Cinram, Inc Lyons HR Temporary Staffing Services Agreement 1941 Florence Blvd. $315,11o Iii Florence, AL 35630
'91
Cmram, Inc Lyons HR Exhibit A to Agreement for Staffmg 1941 Florence Blvd. Included in Contract No Services Florence, AL 35630 590 above.
592 Cmram inc. Securitas Security Sennces USA, Inc. Addendum/Amendment/Renewal to 3776 Sullivan Street $289,707 as Security Services Agreement Smte G Madison, AL 35758
593 Cinram, Inc. Secuntas Security Services I/SA, Inc. Security Services Agreement 3776 Sulhvan Street Included in Contra" i No Suite G 593 above. Madison, AL 35758 -——-I 594 Cinram Allegiance Secunty Group, LLC Security Services Agreement (United Dallas Branch $72,77'8 States) 835 E. Lamer Blvd. 8403 Arlington, TX 76024
595 Cinram International inc. Xerox Canada Ltd. Total Document Solutions Agreement 33 Bloor St. East $0 cri Toronto, Ontario M4W3H1
596 Vision Information Logistics LLC U5 Signal Company, LLC Colocation Agreement 201 Ionia Ave. SW, Grand Rapids, Ml 50.00 49503 597 Vision Information Logistics LLC U5 Signal Company, LLC Internet Services Agreement 201 Ionia Ave. SW 50 00 Grand Rapids, Ml 49503
598 Ditan N Frame, Inc. Master Agreement 701 Congressional Blvd. $8,455 "I', Ste. 100 Carmel, IN 46032 599 Ditan N Franie, Inc. Invoice 701 Congressional Blvd. Included ln Contrar'io Ste 100 598 above. Carmel, iN 46032 600 Ditan N Frame, Inc. Invoice 701 Congressional Blvd Included in Contract No ] Ste. 100 598 above. Carmel, IN 46032- 601 Ditan N Frame, Inc invoice 701 Congressional Blvd. Includedln Contract Sio Ste. 100 598 above, Carmel, IN 46032 602 Ditan N Frame, Inc. Invoice 701 Congressional Blvd. Included in Contract No Ste. 100 598 above. Carmel, IN 46032 603 Ditan N Frame, Inc Term Sheet 701 Congressional Blvd Included in Contract No Ste 100 598 above. Carmel, IN 46032 604 Ditan N Frame, Inc. Term Sheet 701 Congressional Blvd. lncludedin Contract No Ste. 100 598 above. Carmel, IN 46032 605 Ditan N Frame, Inc. Term Sheet 701 Congressional Blvd Included in Contract No. Ste. 100 598 above. Carmel, IN 46032 606 Vision Information Logistics LLC US Signal Company, LLC Private Line Service Agreement 201 ionia Ave SW $000 Grand Rapids, Ml 49503
607 Vision Infprmation Logistics LLC US Signal Company, LLC Virtual Ethernet Services Point to Point 201 ionia Ave. SW $000 Agreement Grand Rapids, Ml 49503
608 Vision Information Logistics LLC US Signal Company, LLC Colocation Agreement 201 ionia Ave SW 50.00 Grand Rapids, Mi 49503 .( Supply Contracts
' ' - o' =;"c "..'.;a:.';:". Caauntefp'arty',cc'".-"&,".-;.:: "Cure A'mo'iint [1]. Nor Cfnr'am Pa'ity" . ': ',"'. Counterparty "'' 1':"-"c",;.1; -: 'Itka Asreeineht':, ' Addyeks of 609 Gnram windstream Service Agreement 600 Wigowgrook Office Park $0.00 Fairport, Ny 14450
610 Cinram Inc Smgulus Technologies AG Order Acknowledgment for Five Hanauer Landstrasse 103 $0.00 Automatic 80 ROM Single and Dual Layer 63796 Kahl/Main Manufacturing Systems (Purchase Order Germany attached) Landstrasse 0.00 611 Cinram Operations UK Ltd Singulus Technologies AG Order Acknowledgment for Twa Hanauer 103 $ Automatic BD ROM Single and Dual Layer 63796 Kahl/Main Manufacturing Systems Germany 612 Cinram International Inc. Marsh Canada Limited Client Services Agreement 70 University Avenue Sultry 800 Toronto, ON MSJ 2M9
1,009.22 613 Cinram International Inc. Arkadm Service Agreement 480 Umversity Avenue $ Suite 505 Toronto, Ontario MSG 1V2 Westview Avenue 803,367.25 614 Cinram Manufacturing LLC United Parcel Sewice, Inc. Carner Agreement 17201 $ Suite 8 South Holland, IL 60473
Westview Avenue InrJuded in Contract No. 615 Cinram Manufactunng LLC United Parcel Sewice, Inc UPS Incentwe Program Agreement 17201 Suite 8 614 above. South Holland, IL 60473 5,843 42 616 Cinram Manufactunng LLC EMC Corporation EMC2 Master Ordering Agreement 176 South Street $ Hopkinton, MA 01749
In'eluded In Contract No. 617 Cinram Manufacturing LLC EMC Corporation Master Lease Agreement, as amended 176 South Street Hopkinton, MA 01749 616 above.
618 Cinram International Inc. Grand 8 Troy Limited Sales Agreement 200 Aviva Park Drive $1,718.15 Vaughn, ON L4L 9C7
619 Cinram International Inc OfficeMax Incorporated Addendum to Sales Agreement 263 Shaman Blvd. $ 40i853.94'20 Naperville, IL 60563
'" '.$ Cinram, Inc. Alhance Inc. Temporary Staffing Services Agreement 9370 Madison Blvd. 95 5/5 27c Madison Al, 35758
75,521A7 621 Cinram inc ABAE Personnel/EPSCO Temporary Staffmg Services Agreement 3305 A Bob Wallace Ave $ Huntsville, Al 35805
'43.00 622 Cmram International inc. Ivlatian industnes, Inc. Purchasing Agreement [390 BRADWICK DR VAUGHAN, ON L4K 2W4)
7,125,00' 623 Ceram Manufactunng LLC Wafer Reclaim Services, LLC Purchase Agreement Michege Hannah $ WRS Materials 5250 Neil Road, Suite 101 Reno NV 89502 '163.88 624 Cinram —LaVergne, TN AdPro Generator Services Maintenance Agreement 110 Donna Drive Hendersonville, TN 37075
[1]The Cure Amounts set forth in this schedule are sublect to downward adjustment by the Debtors for the following: assumption; (i) any credits, rebates and other amounts due to the Debtors and their affikates by the Contract Counter-Party and its aflihates as of the date of of the CCAA Initial Order; and (ii) ag amounts paid by the Debtors after June 30, 2012 on account of amounts owing to the Contract Counter-Party or its affihates on the date of entry for estimation of the Cure Amounts. (iii) differences between the amounts actually incurred by the Debtors for the months of May and June 2012 and the estimates for such periods used the Employment Agreements
Ref ffo:.'.:CblrbmLPaity".,":;,";,'&'~?:""~,'-;;"'d~;""„~tCii(i 8'ejs 'tj „',:"'-'-.-'i Title of»Agi eeriierit .;—-:»"Jz,'»iJt»ddrei's of'Couiitefpa sty: ~'»"-v "»r .,', i -: '";:,'-
625 Cinram International inc. John Beo Employment Agreement 61 Clifton Road So.ao Toronto, ON M4T 2EB
626 Cinram International Inc. John Bell KERP Letter Agreement 61 Cbfton Road, Toronto, ON Sa.ao M4T 2EB
627 Cinram International inc Steven Brown Employment Agreement 264 Spadina Road $o.oo Toronto, ON MSR 2V1
628 Cinram International Inc. Steven Brown KERP Letter Agreement 264 Spadina Road $0.00 Toronto, ON MSR 2V1
629 Cinram Distribution LLC Howard Berman Employment Agreement 860 Via de la Paz, Suite F-4, $0.00 Pawfic Palisades, CA 90272
630 Cmram International Inc. David Ashton Employment Agreement 2224 Robinwood Court, $0,00 Mississauga, ON LSM 589
631 Cmram Distribution LLC John Crosier Employment Agreement 2258 Ronde Vista Drive, Los $0.00 Angeles, CA 90067
632 Cinram International Inc John Barnett Employment Agreement 931 Denbar Ct. $0.00 White Lake, Ml 48386
633 One K Studios, LLC Matthew L Kennedy Employment Agreement 384 Norcroft Avenue $0.00 Los Angeles, California 90024
634 Onram Distribution LI.C Ben Higgins Employment Agreement 1873 N. Kingsley Los Angeles, CA 90027
635 Gnram International Inc. David Ashton KERP Letter Agreement 2224 Robinwood Court, Mississauga, ON L5M 589
636 Cinram International inc Adam Dlugosz KERP Letter Agreement 6 Long Stan $0,00 Stouffvige, ON L4A 1PS
637 Cmram International Inc Dave Munro KERP Letter Agreement 222 Donlea Dr. So.oa Toronto, ON M46 2N2
638 Cinram International Inc Jason Gorel KERP Letter Agreement 75 Westglen Crescent $0.00 Toronto, ON M98 4R2
639 Cinram International inc. Artur Hausz KERP Letter Agreement 99 Southfield Ave. $0.00 Courtice, ON L1E 3J9
640 Clnram International inc Mark Pereira KERP Letter Agreement 194 Sunnyside Ave. $0.00 Toronto, ON M6R 2P2
641 Cinram International Inc. Chns Nadon KERP Letter Agreement 250 Kingsiake Road $0.00 North york, ON M2J 3GB
642 Cinram International Inc Joy Webster KERP Letter Agreement 6412 Blacknver Rd P.O Box 4, RR82 Sutton West, ON LOE 1RO 643 Cinram International inc. Dean MacNeia KERP Letter Agreement 22 Ivanic Crt. $0.00 Whitby, ON L1N 6E3
644 Cinram International inc. Joanne Greslovski KERP Letter Agreement 785 Hedgerow Place $0.00 Pickering, ON L1V 3H3
645 Cinram international inc. Wigiam Mueller KERP Letter Agreement 9117Brentmeade Blvd. Brentwood, TN 37027
646 Cinram international Inc. John Barnett KERP Letter Agreement 931 Denbar Ct. $o.oo White Lake, Ml 48386
647 Cinram International inc Phil Tocco KERP Letter Agreement eaa Chancy Road Apt 511 $0.00 Smyrna, TN 37167 648 Cinram international inc Tom Whishard KERP Letter Agreement 1001 Charles Street Sa.ao Dunmore, PA 18512
649 Cinram International Inc. Merc Rachlin KERP Letter Agreement 3030 Bonaventure Ct $0.00 Murfreesboro, TN 37127
650 Cinram International inc Bob McAndrew KERP Letter Agreement 1325 Cherry Street $0.00 Scranton, PA 18505 Employment Agreements
cjruhterparty'''»,"'~qy»:,"'.:.:4-':.; ~~;v "',."~ Ray%a~" Gnyanrtpkityi":,.;:", " '-"- "';",".,counte'sporty", .".'..'»3 Tgle of'A»gr'cement'i;;.-',:=';,'I I A'd'dress'uy '000 651 Cinram International Inc. Shawn Getcheg KERP Letter Agreement 804 Overtake Ct. Euless, TK 76039
652 Gnram International Inc. Sean Mancuso KERP Letter Agreement 502 Thackeray Close Moosic, PA 18507
653 Cinram Internationalinc. Divit Basaravaj KERP Letter Agreement 1805 Washington Street Aptg 229 South Wilkes Barre, PA 18701
0.00 654 Cinram International Inc. Stephen Smith KERP Letter Agreement 338 Pear Street $ Scranton, PA 18505 Real Property Leases
655 Cinram Inc. 300 Diamond Drive, LLC Warehouse Lease C/0 Triad Properties $0.00 100 Church Street, SW Huntsville, AL 35801
656 Cinram Inc. Stag 8 Huntsville, LLC Lease Agreement 99 Chauncy St. So.oo 10th Fir. Boston, MA 02111
657 Cinram International Inc. Nugget Avenue (Phase I) Inc. Lease c/o KingSen Capital Inc. $0.00 Suite 4400 TD Bank Tower Toronto-Cominion Centre 66 Wellington St. W Toronto, ON MSK 1H6
658 Cinram International Inc. Rodenbury Investments Limited Industrial Lease - Single 2425 Matheson Blvd. East $0.00 Tenancy 8th Fir Mississauga, Ontario L4WSK4
659 Cinram Distribution LLC Industrial MS Logistec Owner Industrial Building Lease c/o Carter $0,00 LLC 4211 W. Boy Scout Boulevard Suite 520 Tampa Flonda 33607 Atten: John Carter
660 Cinram Distribution LLC US Industrial REIT II Industnal Bwlding Lease and 9830 Colonnade Boulevard Termmation of Lease, as Suite 600 amended (dated April 16, San Antomo, TX 78230-2239 2012, amended April 27, 2012 and May 4, 2012)
661 Cinram Distnbution LLC Raymond Handhng Concepts Sublease Agreement Atten: Ron Curtis, VP Finance $0.00 Corporation 41400 Boyce Road Fremont, CA 94538
662 Cinram Distnbution LLC Harsch Investment Lease Agreement Harsch Investment Realty, LLC Series E c/o West Park Corporation Campus 5003 Paafic Highway East, Unit 2 Fife, WA 98424
663 Cinram Distnbution LLC Annabel Investment Company Bishop Ranch Building Lease One Annabel Lane $0.00 Swte 201 San Ramon, CA
664 Cmram Distnbution LLC South Park Group LLC Office Lease PO Box 150764 $0.00 Nashville, TN 37215-0764
665 Cmram Distnbution LLC Batavia Enterprises, Inc Office Lease 140 First St. $0.00 Batvia, IL 60510
666 Cinram Retail Services LLC Osprey-Troy Officentre, LLC LeaseAgreement 7600 Grand Rwer Ave. $0.00 Suite210 Brighton, Ml 48114
667 One-K Studios LLC Warner Music Group Inc. Office Sublease 75 Rockefeller Plaza $47.459 87 New York, NY 10019 668 Cinram Inc. The Industrial Development Amended and Restated 225 Church St. $45,170.83 Board of the City of Huntsville Lease Agreement Huntsville, AL 35801
669 Cinram Distribution LLC Take-Two Interactive Software, Agreement of Sublease 626 Broadway $000 Inc. and Jack Of All Games, Inc New York, NY 10012 Real Property Leases
.'.— = ' 670 Cinram Distribution LLC. Crossings Center Seven, LLC and Three Party Agreement Crossing Center Seven, LLC ., $0.00 Arnold Moving Company, Inc. Amending Lease and c/o Capstone Realty, Inc. Terminating Sub 12910Shelbyville Road Suite 200, Louisville, KY 40243
Arnold Moving Company 5200 Interchange Way Louisville, KY 40229
[1]The Cure Amounts set forth in this schedule are subject to downward adjustment by the Debtors for the following: affiliates of assumption; (i) any credits, rebates and other amounts due to the Debtors and their affiliates by the Contract Counter-Party and its as of the date of the CCAA Initial Order; and (ii) all amounts paid by the Debtors after June 30, 2012 on account of amounts owing to the Contract Counter-Party or its affiliates on the date of entry used estimation of the Cure Amounts. (iii) differences between the amounts actually incurred by the Debtors for the months of May and June 2012 and the estimates for such periods for the IP Ucense Agreements
Nok ", Ciniain,pazztyr .='."'":.'i'-"'i .~'i."" i" CciifnterzpartyPP~4PA~'",„;:;:":.-i*;:,-; .,:"-;:;Title'of!Agreement: Or:ii'!"r!ri;":'":.i,. Address of Coiuentetfmrtsy=;r»'-;"i;:;-"-:"" '"' Cure'Amount 313
671 Onram International Inc Cinram Latinoamericana 5 A. de C.V Ucense Agreement Boulevard Adolfo Ruiz Cortines No. 3642 50 ooooj Piso 16, Unidad 01 Col. Jadines del Pedregal Dl. Alvaro Obregon CP 01900 Mexico, D.F.
672 Cinram International fnc. Toshiba Corporation DVD Patent License Agreement 1-1,Shibaura 1-chome 59,180,187.7 Minato-ku Tokyo 10S-&001 Japan
673 Cinram international inc. PricewaterhouseCoopers Aarata Request for royalty adiustment of Sumitomo Fudosan Shiodome DVD Patent License Agreement Hamarikyu Bldg. 8-21-1 Ginza Choo-ku Tokyo 104.0061 Japan
674 Cinram International fnc. MPEG LA, L L C MPEG-2 Patent Portfolio License and 6312 5 Fiddler's Green Circle 52,36'7, ts I 6 if MPEG-2 Packaged Medium Suite 400E Amendment Greenwood Village, CO 80111,USA
675 Cmram International inc. Koninkhjke Philips ElectrorfIFs N.V. DVD Video Disc and DVD ROM Disc PO Box S0002 57 370,54733 Patent License Agreement Building SFF-8 5600 JB Eindhoven The Netherlands
676 Cinram International inc. Koninklilke Phihps Electronics N.V. MPEG Patent License Agreement PO Box 80002 Building SFF-8 5600 JB Eindhoven The Netherlands
677 Cinram International inc. Koninkkike Phihps Flectronics N V. CD Disc Patent License Agreement PO Box SM02. Building SFF-8 5600 JB Emdhoven The Netherlands 678 Onram International, Inc. Toshiba Corporation 804C Patent License Agreement 1-1,Shibaura 1-chome Minato-ku Tokyo 105-8001, Japan
679 Cinram International, Inc. Macrovision Corporation Intellectual Property License for 2830 De La Cruz Boulevard ;,0 oo Macrovision's Technologies Santa Clara California 95050, USA
680 Cinram international, Inc. Matsushita Electnc Industnal, Co, Ltd Settlement and License Agreement 1006 Kadoma 50.00 Kadoma Osaka 571-SSOL Japan
681 Cinram International Inc. Discovision Assoaates Settlement Agreement 2355 Main Street So.oo 5uite 200 Irvine, California 92614
682 Cinram International Inc. Discovision Associates Patent Acquisition Agreement 2355 Main Street So.oo Swte 100 Irvine, California 92614 IP Ucense Agreements
683 Onram International Inc. Discovision Associates Patent License Agreement for Disc 2183 Fairview Road $0.00 Products, as amended by letter Suite 211 agreement dated January 1, 1999 Costa Mesa, California 92627
6&4 Cinram International Inc. Philips Electronics, N.V. Patent and Know-How License 75 Rockefeller Plaza So.oo Agreement New York, NY 10019
685 Cinram International inc. Time Warner Companies, Inc. Cross-License Assignment and 1 Time Warner Centre $0.00 Assumption Agreement New York, NY 10019
686 Cinram International inc. Time Warner Inc. Indemnification Agreement 1 Time Warner Centre So.oo New York, Ny 10019
687 Onram International inc. Time Warner Inc. Patent Covenant Not to Sue 75 Rockefeger Plaza So.oo Agreement New York, NY 10019
688 Cinram International Inc, DVD Format/Logo Licensing Corporation DVD Format/Logo License Agreement 2-3-6 Shibadaimon $0.00 Minato-ku, Tokyo 105-0012 Japan
689 Cinram International inc. Blu-ray Disc Assomation Blu-ray Disc Read Only Format 2 0 and 10 Umversal City Plaza So.oo Logo Licensing Agreement T-100 Umve real City, CA 91608,tJ5A
690 Cmram International Inc. Blu-ray Disc Association Blu-ray Disc Read Only Format 3 0 and 10 Universal City Plaza SCLOO Logo Licensing Agreement T-100 Universal City, CA 91608, USA
691 Cmram International Inc. Advanced Access Content System License AACS Intedim Adopter Agreement AACS Administration $0.00 Adminiftrator LLC 3855 SW 153rd Dnve Beaverton, OR 97006
692 Cinram Manufacturing LLC Advanced Access Content System License AACS Key Delivery Agreement AACS Administration $29 763.60 Administrator LLC 3855 SW 153rd Dnve Beaverton, OR 97006
693 Cinram international Inc. Rovi Solutions Corporation CopyBlock Letter Agreement 2830 De La Cruz Boulevard Sccoo Santa Clara, Cakfornia 95050, USA
694 Cinram Manufactunng LLC 4C Entity LLC 4C CPRM/CPPM License Agreement 225 9 Cochrane Circle $0.00 Morgan Hill, CA 95037
695 Cinram Internationallnc. Koninklgke Phikps Electronics N V Side Letter to DVD Video Disc and DVD PO Box 218 $0.00 ROM Disc Patent License Agreement 5600 MD Eindhoven The Netherlands IP Ucense Agreements
-';: . Nrg,'rrL Clnrbenr Par'tys:; ...":;;;':r',';"C Cb(rntavrp'arrttrtgk'~%l':;"&~S&,'-;-';:~4~4'rsj xx-".ig''ra ~sdff(Argraeca'mr'efrt~fq";„:r;- „r'"-.;,',- ",p 'dds'aseotCounterp'af[(rr '-:;-";"-. i'"R,':;I!.CsurarAiiiounit [1]. 696 Cinram International Inc. Koninklijke philips Electronics N.V. Side Letter to DVD Video Disc and DVD pO Box 218 SO 00 ROM Disc Patent License Agreement 5600 MD Eindhoven The Netherlands
697 Cinram International Inc. Koninkliike Philips Electronics N.V. Side Letter to CD Disc Patent License PO Box 218 60.00 Agreement 5600 MD Eindhoven The Netherlands
[1[The Cure Amounts set forth m this schedule are subiect to downward adjustment by the Debtors for the following: (i) any credits, rebates and other amounts due to the Debtors and their affiliates by the Contract Counter Party and its affiliates as of the date of assumption (iij all amounts paid by the Debtors after June 30, 2012 on account of amounts owing to the Contract Counter party or its affiliates on the date of entry of the CCAA Initial Order; and (ia) differences between the amounts actually incurred by the Debtors for the months of May and June 2012 and the estimates for such penods used for the estimation of the Cure Amounts Personal Property leases
AddiesiofCodrlteipat3y.;:;"'. ',.w'oute'Ambi'irit(1);,: -5 698 Cinram, Inc Crown Credn Company Lease Schedule No 40189774 pursuant to the terms New Bremen, Ohio 45869 $0.00 of the Master lease Agreement 699 Cinram, Inc. Crown Credit Company lease Schedule No. 40201869 pursuant to the terms New Bremeri Ohio 45869 $0.00 of the Master Lease Agreement and Purchase Option Rider to Lease Schedule 700 Cinram Thompson Lift Truck Co. Lift Truck Rental Contract 2222 Pinson Highway $1,665.56 PO Box 10367 Birmingham, AL 35202
701 Cinram, Inc. NMHG Finanaal Services, Inc. Master Lease Agreement No. 8487075 10 Riverview Orive So.oo Oanbury.CT06810
702 Cinram, Inc. Carolina Handhng LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road $0.00 Number 2100730 Tucker, GA 30084-5218
703 Cinram, Inc Carolina Handling LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road $0.00 Number 2100731 Tucker, GA 30084-5218
704 Cinram, Inc. Carokna Handling LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road $0.00 Number 2100736 Tucker, GA 30084-5218
705 Cinram, Inc. Carolina Handhng LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road Number 2100737 Tucker, GA 30084-5218
706 Cinram, Inc. Carolina Handbng LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road 210733 Tucker, GA 30084-5218
707 Gnram, Inc. Carolina Handkng LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road Number 2100738 Tucker, GA 30084-5218
708 Cinram, Inc. Carokna Handling LLC Raymond Leasing Corporation Schedule A Agreement 1955 Montreal Road $0.00 Number 2100739 Tucker, GA 30084-5218
709 Cinram Thompson Lift Truck Co. Lift Truck Rental Contract 2222 Pmson Highway $0.00 PO Box 10367 Birmmgham, Al 35202
710 Cinram Thompson Lift Truck Co. Thompson Tractor Rental Extension 2222 Pinson Highway $0,00 PO Box 10367 Birmingham AL 35202
711 Cinram International inc. G.N. Johnston Equipment Co. Ltd. Lease Agreement (Lease N: 6024) 5990 Avebury Road So,oo Mississauga, ON LSR 382
712 Cinram International Inc. G N. Johnston Equipment Co Ltd. Lease Agreement(Lease il. 6026) 5990 Avebury Road Mississauga, ON LSR 3R2
713 Cinram International inc. G.N Johnston Equipment Co. Ltd Amendment to Equipment lease (Lease Number 5990 Avebury Road 6072/4918) Mississauga, ON LSR 3R2
714 Cinram International inc. G.N. Johnston Equipment Co Ltd. Lease Agreement (Lease 8'859) 5990 Avebury Road Mississauga, ON ISR 3R2
715 Cinram International Inc. G.N. Johnston Equipment Co. Ltd. Lease Agreement (Lease N 6905) 5990 Avebury Road Mississauga, ON LSR 382
716 Cinram international Inc. G.N. Johnston Equipment Co. Ltd. Lease Agreement (Lease N: 6906) 5990 Avebury Road Mississauga, ON l5R 3R2 717 Onram International inc. G.N. Johnston Equipment Co. Ltd Lease Agreement (Lease ¹.6970) 5990 Avebury Road $0.00 Mississauga, ON l5R 3R2
718 Cinram International Inc. G.N. Johnston Equipment Co. Ltd. Lease Agreement (Lease 8:7200) 5990 Avebury Road Mississauga, ON ISR 382
719 Cinram International inc. G.N Johnston Equipment Co Ltd. Amendment to Equipment Lease (Lease Number 5990 Avebury Road $0.00 7200/9053) Mississauga, ON LSR 3R2
720 Cinram International Inc. G N Johnston Equipment Co. Ltd Lease Agreement (Lease N: 7689) 5990 Avebury Road $0.00 Mississauga, ON LSR 3R2
721 Cinram International inc. G.N. Johnston Equipment Co. Ltd Lease Agreement (Lease N: 7690) 5990 Avebury Road $0.00 Mississauga, ON LSR 3R2
722 Cinram International lnc. G.N Johnston Equipment Co Ltd Lease Agreement (Lease N: 7691) 5990 Avebury Road So.oo Mississauga, ON LSR 3R2
723 Cinram International inc G.N Johnston Equipment Co. Ltd Lease Agreement (Lease N. 7762) 5990 Avebury Road $0.00 Mississauga, ON lSR 382
724 Cinram International Inc G.N Johnston Equipment Co Ltd Amendment to Equipment Lease (Lease Number 5990 Avebury Road $0.00 MTA 6255/JOE /835) Mississauga, ON LSR 3R2
725 Cinram International Inc G N Johnston Equipment Co Ltd. Amendment to Equipment Lease (Lease Number 5990 Avebury Road $0.00 MTA 6254/7882) Mississauga, ON ISR 3R2 'I 726 Cinram International Inc G.N Johnston Equipment Co Ltd. Amendment to Equipment Lease (Lease Number 5990 Avebury Road $0.00 MTA 6223/7883) Mississauga, ON LSR 3R2
727 Cinram International Inc G N. Johnston Equipment Co. Ltd. Amendment to Equipment Lease (Lease N. 5990 Avebury Road $0.00 8024/6224) Mississauga, ON LSR 382 172
Personal Praperty Leases
8'ef7(o'@m cfdrant Bartyg» w&%»i'i'7 vsrx'@& (4)a'iiEeip'ar(yw»-",":~MNfwi&3x~ -";.pv.."7 TII(a of»ABFABBJeii@~uvo»»»K~&2c=" ";-':~»'/»wp»~!: Adif)r'egs'adbsbfe. rfmf(y»y/&'4'~s'acs»sg ~e Amm)m(1) international Inc. N. Johnston Co. Ltd. Amendment to Lease (Lease Number 5990 Avebury Raad . 728 Cinram 6 Equipment Equipment 50 00 I 7366/8285) Mississauga, ON LSR 3R2
729 Cinram Ltd Pitney Bowers Canada Agreement No. 8198536 5500 Explorer Ogive 50,00 Mississauga, Ontario L4WSC7
730 Cinram International Inc. CIT Finanaal Ltd. Lease Agreement 5035 South Service Road 50 00 PO Box 5060 Burlington, ON LTR 4CB
731 Cinram International inc. Xerox Canada Ltd Total Document Solutions Agreement 33 Bloor St. East 50 00 Toronto, Ontario M4W3H1
732 Cinram, inc. Brauer Material Handlmg Systems, inc. Raymond Leasing Corporation Schedule A Agreement 226 Molly Walton Dnve 5 0 00 Number: 2100739 Hendersonvige, TN 37075
733 Ditan Distribution/Cmram Corp. Network storage, Inc LeaseNet, Inc. 2361 Morse Road 50 00 Columbus, Ohio 43229
734 Cinram, inc. Orion Asset Management Orion Throughput Agreement 2210 Woodland Drive 545,781 33 divof Manitowoc, Wl 54220 Onon Energy Systems Inc. 735 Cinram, Inc Yale Leasing - NMHG Financial Services, Master Lease Agreement No. 8487075 10 Riverview Drive Inc. Danbury, CT 06810
736 Gnram Distnbution Pure Water Technology of Nashville Rental Agreement 120 E. Lake Street Suite 401
5 an dpoint. ID 838!i4
(1)The Cure Amounts set farth in this schedule are subject ta downward adiustment by the Debtors far the following: credits, re bates other amounts due the Debtors and their affiliates the Contract Counter-Party and its affdiates as the date of (i) any and to by of assumption,'a) ag amaunts paid by the Debtors after lune 30, 2012 on account of amountgrawtng to the Contract Counter-party or its affiliates on the date of entry of the CCAA Initial Order; and (w) differences between the amounts actually mcurred by the Debtors for the months af May and June 2012 and the estimates for such periods used for the estimation af the Cure Amounts Purchase Agreements
' -".'; '.::;-.;-'-'r~ Ref No. & Cfhram'Party 7 "' - Couinterpertyc: 7v ','": "":-'itlebfiAgree«mettt';;;.Is. -'.«,':,'":.Address'4 of Couhterp'arty-,,',: 'r . —..;..-:;;"!Ci)rekAfnount " 737 Cinram International lnc. Fevama S.A. de C V., Monica Agreement for Sale of Stock Boulevard Adolfo Ruiz Cortines No. 3642 So.oo Valdes Macias and Piso 16, Unidad 01 Magdalene Valdes Macias Col. Jadmes del Pedregal Dl. Alvaro Obregon CP 01900 Mexico, O.F.
738 Gnram (U.S.) Holding's Inc. Matthew Kennedy and Purchase Agreement Matthew Kennedy Jayson Won 384 Norcroft Avenue Los Angeles, CA 90024
Jayson Won 631 North Clybourne Avenue Burbank, CA 91505
Mad Media USA 3450 Cahuenga Blvd Suite 101 Unwersal City, CA 91606
739 Cinram (U.S.) Holding's, Inc Community Bank Commercial Guaranty 2800 N. Hollywood Way Burbank, CA 91505-1023 Attn: Jeffrey Garavanian Employee Benefits/Workers Compensation Agreements
.".,Iq-. cfnranvs party''.'-",-...::"..''..",';:coiinte'fparrtsy';:!'~.;;- '. ':;";~:„'; Tftle'of Agieiemennwt:,; —.-';.'"-rx4/;,";:."Address of couv/nterpa4~&i~fw+i'o7'-:iy;cuieAmonunt"; .':;;:,, 740 Cinram, Inc. Blue Cross and Blue Shield of Admimstrative Services Agreement 450 Riverchase Parkway East $0.00 Alabama (as renewed) Birmingham AL 35244-2858
741 Cinram (U.S.) Holding's, inc. Medco Health 5olutions, Inc. Integrated Prescription Drug 100 Parsons Pond Drive 50.00 Program Agreement (as renewed) Franklin Lakes, NJ 07417
742 Cinram US Holdings Inc. Metropolitan Ufe Insurance Group Policy 303280-1-G (as 200 Park Avenue $0.00 Company renewed) New York, NY 10166
743 Cinram US Holdings Inc. UnitedHeaithcare Insurance Group Pohcy 8217 (as renewed) 6220 Old Dobbin Lane Company Columbia, MO 21045 Attention Account Management Services
copy Legal Department
744 Cinram (U.S.) Holding's, Inc. Prudential Insurance Non-union Employees Employee 751 Broad Street 50.00 Company of America Term Life Coverage, Dependents Life Newark, NJ 07102 Coverage, Accidental Death and Dismemberment Coverage (as renewed)
745 Cinram (U.S ) Holding's, Inc. Liberty Life Assurance Policy 6D/6 F3-830-505658-01 (as 175 Berkeley Street $0.00 Company of Boston renewed) Boston, Massachusetts02117
746 Cinram U.S. Holding's, Inc. Elite Underwriting Services / Pohcy AFA-SLP-2012-01309-ELITE 2000 North Classen Blvd. 5600 Amencan Fidelity Insurance Oklahoma City, OK 71306 Company
747 WEA Manufactunng Scranton Counsekng Center Employee Assistance Program 326 Adams Avenue $0.00 Agreement for Service Scranton, PA 18503
748 Cinram Manufacturing LLC Sentry Casualty Company byorkers Compensation and 1800 Northpoint Drive 50.00 Employers Liability Insurance Policy Stevens Point, Wl 54481 90-16862-0100 111
749 Cinram Manufactunng LLC Sentry Casualty Company Speafic Excess and Aggregate Excess 1800 Northpomt Dnve 50.00 Workers Compensation and Stevens Point, Wl 54481 Employers Liability Indemnity Pohcy 90-16862-03 00 111and related cliams handhng agreement(s)
750 Gnram Manufacturing LLC St Paul Travelers/The Agreement for Cinram 1500 Market Street $0.00 Travelers Indernmty Company Manufacturing LLC 29th Floor - West Tower Philadelphia, PA 19102 Attn Michael D. Rogers 751 Cinram Manufactunng LLC Travelers/The Travelers Workers Compensation and 1500 Market Street $0.00 Indemmty Company Employers Liabihty Agreement for 29th Floor - West Tower Cinram Manufactunng LLC Philadelphia, PA 19102
752 Cinram International Inc. Travelers /The Travelers Agreement for Cmram international 1500 Market Street $0.00 IndemmtyCompany Inc. 29th Floor - West Tower Philadelphia, PA 19102 Attn Michael D. Rogers 753 Gnram Manufacturing LLC St. Paul Travelers/The Agreement for Gnram 1500 Market 5treet $0.00 ( Travelers Indemnity Company Manufactunng LLC 29th Floor - West Tower Philadelphia, PA 19102 Attn Scott A. Bosco 754 Cinram Manufacturing LLC Travelers Property Casualty Workers Compensation and 1500 Market Street 50,00 Company of Amenca Employers Liabikty Policy TIUUB- 29th Floor - West Tower 822K662-5-06 (as renewed) Philadelphia, PA 19102 Attn Scott A. Bosco 755 Cmram Manufactunng LLC Travelers Property Casualty Workers Compensation and 1500 Market Street $0.00 Company of America Employers Liabikty Policy TIUUB- 29th Floor - West Tower 822K661-3-06 (as renewed) Philadelphia, PA 19102 Attn Scott A. Bosco 756 Cinram Manufacturing LLC Constitution State Services Claim Service Agreement TCSSS- One Tower Square 10-65 $0.00 LLC 306T2451 (as renewed) Hartford, CT 06183 Attn Andrew J. Apacella, President 757 Cinram Manufacturing LLC Constitution State Services Claim Service Agreement TCSSC- One Tower Square 10-65 -$0.00 LLC 306T2045 (as renewed) Hartford, CT 06183 Attn Andrew 1 Apacega, President 758 Cinram Manufacturing LLC Constitution State Sennces Claim Service Agreement TCSSC- One Tower Square 10-65 50.00 LLC 306T2045 (as renewed) Hartford, CT 06183 Attn Andrew J. Apacella, President 759 Cmram gnanufactunng LLC Constitution State Services Claim Service Agreement TCSSC- One Tower Square 10-65 50.00 LLC 306T2045 (as renewed) Hartford, CT 06183 Attn Andrew J. Apacella, President 760 WEA Manufactunng PMA Management Corp Agreement for TPA Services 380 5entry Parkway 50.00 PO Box 3031 Blue Bell, PA 19422-0754 Employee Benefits/Workers Compensation Agreements
".'-,'-:;Rr clttramdraityfs'„""~~ ~v'r,"z~-: cofrfrcerrpna'rfy-.,:''; „-;;";.' Title of'Agieesme'iit d-,;,;;":.*::~.&!K!&'-'ddresscif c/otrnytemrparuy 761 Gnram Manufacturing LLC Safety National Casualty Surety Bond of Self Insurer SIB 3337 2043 Woodland Parkway 50.00 Corporation St. Louis, MO 63146
Commpnwealth of 1171South Cameron Street Pennsylvania Room 324 Department of Labor and Harrisburg, PA 17104-2501 Industry Bureau of Workers Compensation
762 Ceram Manufacturing LLC, Applied Underwnters, Inc. Workers Compensation Policy P.O. Box 3646 50.0IV Ceram Distnbution LLC, Omaha, NE 68103 Gnram US Holding, Inc., Ceram, Inc., Cmram Retail Services LLC, Cinram Wireless LLC and One K Studios, LLC
763 Cinram Green Spnng Services of Ad Hoc Letter of Understanding 895 Don Mills Rd. Canada Co. o/a Corporate (professional assessment, trauma Suite 700 Health Consultants services, short-term counselhng and Toronto, ON case management services) M3C 1W3
764 Cinram International Inc. Manufacturers Life Insurance Employee Benefits Pohcy 901735 Manulife Financial 50.00 Company Suite 201. 4 Lansmg Square North York, Ontario M2I 5A2 V V This is Exhibit "F"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of Au st, 2012.
A for Ming Affidavits Commissioner
JONATHAN ROSS EDGE, a ~, Commissioner, etc., Provirce oi Ontario, while a Student-at-Law. Expires May 5, 2014. —177
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re Chapter 15
CINRAM INTERNATIONAL INC., et aL, Case No. 12-11882(KJC)
Debtors in a Foreign Proceeding. Jointly Administered
SUPPLEMENT TO NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMKNT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THK SALK OF SUBSTANTIAL ASSETS OF THK DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative (the, "Fpreign Representative" ) for the above-captioned debtors (collectively -.the '":Debtor'"),:,,Gled the Foreign Representative 's Motion for Entry ofan Order (I) Recognizing the:Canadian Sale Order, (II) Authorizing and Approving the Sale Free and Clear ofLiens, Claims, Encumbrances', and.Other Interests, @II)Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief (Dkt. No. 9) (the "Motion") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PI EASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America.
PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 of the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801,on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the Uripbd States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc, (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M IB 2W3, Canada.
NYDOCS03/951443.6 178
the territorial jurisdiction of the United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement {the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser, among others, ~an of the executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Supplemental Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Supplemental Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assign a contract is subject to change by the Purchaser. Specifically, among other things, the Purchaser has reserved all rights with respect to removing anv executory contract or unexpired lease &om the Supplemental Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list ofthe Assigned Contracts that were actL'ially assumed and assigned to the Purchaser at closing with the Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you «re a party to an Assigned Contract listed on the Supplemental Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. Ifyou have any questions about this Notice or the Supplemental Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court: FTI CoNSULTING, INc., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P.O. Box 104, Toronto, ON M5K 168 Canada, toll free at 1-855-718-5255, fax 1-416-649-8601,or email Cinramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Supplemental Assumption Schedule to which you may be a party.
.PLEASE TAKE FURTHER NOTICE THAT section 365(b)(1) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure, any defaults under executory contracts and unexpired leases at the time oftheir assumption.
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Supplemental Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the Supplemental Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease.
NYDOCS03/951443.6 —179
Accordingly, the Debtors have conducted a thorough review of their books and records and have determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Supplemental Assumption Schedule. Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Supplemental Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Supplemental Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of the Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at: www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave,, El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: htto://www,deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT the deadline for filing objections to the assumption and assignment of the Assigned. Contracts and the associated cure amount listed in the Supplemental Assutnption Schedule is July 20, 2012 at 4:00 p.m. prevailing Eastern Time. Any objections must: (a) be made in writing; (b) conform to the Bankruptcy Rules, the Local Rules, and any orders of the Banhptcy Court; (c) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the cure amount listed in this Notice that would resolve such objection; and (d) be filed with the Bankruptcy Court (contemporaneously with a proof of service) and served upon the following parties so as to be actuallv received by July 20, 2012 at 4:00 p.m. prevailing Eastern Time:
NYDOCS03/951443.6 3 SHEARMAN 8r, STERLING LLP YOUNG CONWAY STARGATI'c THE OFFICE OF THE UNITED Attn: Douglas P.Bartner, Esq. TAYLOR, LLP STATES TRUSTEE FOR THE Attn: Robert Briitton, Esq. Attn: Pauline K Morgan, Esq. DISTRICP OF DELAWARE 599 Lezlngton Avenue Attn: Kenneth J.Enos, Esq. Attn: David Klauder New York, New York 10022 Rodneysquare 844 King Street, Suite 2207 Co-Cotarsel to the Foreign Representative 1000 North King Street Wilmington, Delaware 19801 Wamiagton, Delaware 19801 Co-Counsel to the Foreign Representative
MORRIS, NICHOLS, ARSHT 8r. WACHTELL, LIPTON, ROSEN BALLARD SPAHR LLP TUNNELL LLP Jc KATZ LLP Attn: Matthew G. Summers, Esq. Attn; Derek C. Abbott Attn: Richard G. Mason, Esq. 919N. Market Street, 11th Floor 1201 North Market Street, 18th Floor Attn: Joshua A. Feltman, Esq. Wsmington, Delaware 19801 Wilmington, Delaware 19899 51 West 52 Street Counsel to the Proposed Purchaser Co-Counsel to the Debtors 'repetition New York, NY 1QQI9 Secured Lenders and DIP Lenders Co-Counsel to the Debtars
Secured Landers 'repetition and DIP Lenders
PLEASE TAKE FURTHER NOTICE THAT any counterparty fo an Assigned Contract that fails to object timely to the proposed assumption or cure amount set forth on Schedule I will be deemed to have agreed to such assumption and cure amount without any further order of or action by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CON'NKCTION WITH THK SALK OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONKTARY gÃCLUDING DEFAULTS OF PROVISIONS RESTRICTING THK CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHER BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THK DATE THAT THK DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
NYDOCS03/951443. 6 Dated: Wilmington, Delaware SHEARMAN k STERLING LLP July 13,2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONAWAY STARGATT k TAYLOR, LLP
Is/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Representative
NYDOCS03/951443.6 5 SCHEDULE I TO THE CONTRACT ASSUMPTION NOTICE
Supplemental Assumption Schedule
NYDOCS03/951443.6 Supplement No. 1to Assumed Contracts Ust
Sfpka Montana Iar Angeles CA 1 Crnram Dlstributhn Happiest Baby, lnc. Inventory Attn: Mar()a 11357 LLC Management Avenue Services Agreement
Stoddey Park Uxbrtdga United Kingdam UB11 IAf 2 Clnram Retail Actlvlslon Bgzzard Rstag inventary Attn: VP 3 Roundwood Services ILC Deutschhnd GmbH and Services Agreement International Avenue Activlslon Blizzard France Business Afhlrs SAS london United Kingdom W14 BNS 3 Gnmm Retail Universal Musk Group Latter of Intent Attn: Richard 364.366 Kensington Servkes LLC Interns tfonal Constant High Street 91505 4 Gnram Retail Buens Vista Home 3900 Wast Almeda Bur bank Ssrvkes LLC (f(k/a Entertainment, Inc Avenue Visfan informathn logistics, LLC)
5 Gnram AOP Canada Ca. Payroll sary(ces Attar Jeff 3250 Bloor Street Etobfcake ON International Inc. salas order and Gladman, Nsthnal West terms and Account conditions Management
Toronto M5C 266 6 Gnram Allen and Huras Agreement far 2 Toronta St. ON Intenwtfonal Inc. Professlanal Corporation Workers'ompensathn Cost Containment gr Recovery Services
Etobkoke ON M9C SK4 7 Gnram HR Technologies 290 North Queen Intematlona I inc. Stmet ON M9CSK4 B Gnram HR Technolagles Lkense Agreement 290 North Queen Etoblcok» International inc. (December 3, 2005} Stmet
Etobkoka ON MSC SK4 9 Gnram HR Technolagles Lkense Agreemsnt 290 Narth Queen International inc. (Iuly 13,2006) Street
10 Gnram HR Technologies Software 290 North Ciuesn Etoblmke ON Internationallnc Mafntenanca Street Agreement M9C 5K4 11 Gnram Hardware 290 North Queen Etobicake ON International inc Maintenance Street Agreement MSS 252 12 Cinram Clntas Standard Uniform 3370 Dundas Street Toronto ON International Inc Rental seivlce West Agreement 39502 13 Clnram WRS Materials Consigned Attn, Mkhege 5250 Neil Road Suite 101 Reno NV Manufacturing LLC Inventory Hannah Agreement 14 Clnram Penguin Group (USA) Ina. Terms and 375 Hudson Stmet New York Ny 10014 Manufacturfng LLC Conditions of Sale
15 Clnram PHH Vehicle Cash Collateral Attn: Angle Aucaln 2233 Argentla Rd Suite 400 Mkslssa vga ON LSN 2X7 International Lnc. Management Services Agre ament Inc. LSN237 16 Gnmm PHH Vehlde Card Servkes Attn: Angle.Aucoln 2233 Argentia Rd Suits 400 Mlsslssauga ON International Inc. Management Senrices Agreefnent Inc. GA— 17 Clnram (U.S.) ADP, Inc. National Accaunt 5300 Windward Alpharetta Holdfnf(s, Inc. Senrfces Master Parkway Senrice Agreement
a Included In cure for contract reference no, 673 In original natlce ( This is Exhibit "6"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
A Commifrioner for 'Mking Affidavits
JONATHAN ROSS EDGE, a Commissioner, etc., Pmvince ot Ontario, while a Student-at-Law. Expires May 5, 2014. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re Chapter 15
CINRAM INTERNATIONAL INC., et al,, Case No. 12-11SS2(KJC)
Debtors in a Foreign Proceeding. Jointly Administered
Ref. Docket Nos. 50 and 59
SECOND SUPPLEMENT TO NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THE SALE OF SUBSTANTIAL ASSETS OF THE DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative (the "Foreign Representative" ) for the above-captioned debtors (collectively,.the."Debtors".), filed the Foreign Representative 's Motion for Entry ofan Order (I) Recognizing the Canadian Sale Order, (II) Authorizing and Approving the Sale Free and Clear ofLiens, Claims, Encumbrances, and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief (Dkt. No. 9) (the "Motion" ) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PLEASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America.
. PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 ofthe United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801,on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, MIB 2W3, Canada.
01:12294744.1 the territorial jurisdiction of the United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser, among others, ~an of the executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Second Supplemental Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Second Supplemental Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assrgn a contract is subject to change by the Purchaser. Specifically, among other things, the Purchaser has reserved all rights with respect to removing any executorv contract or unexpired lease from the Second Supplemental Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list ofthe Assigned Contracts that were actually assumed and assigned to the Purchaser at closing with the Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you are a par+ to an Assigned Contract listed on the Second Supplemental Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. If you have any questions about this Notice or the Second Supplemental Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court: FTI CONSULTING, INC., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P.O. Box 104, Toronto, ON MSK 1G8 Canada, toll free at 1-855-718-5255, fax 1-416-649-8601, or email Cinramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Second Supplemental Assumption Schedule to which you may be a party.
PLEASE TAKE FURTHER NOTICE THAT section 365(b)(1) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure, any defaults under executory contracts and unexpired leases at the time of their assumption.
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease.
01:12294744 1 —187
Accordingly, the Debtors have conducted a thorough review of their books and records and have determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Second Supplemental Assumption Schedule. Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Second Supplemental Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Second Supplemental Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of the Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at:, www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave., El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: http: //www.deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT the deadline for filing objections to the assumption and assignment of the Assigned Contracts and the associated cure amount listed in the Second Supplemental Assumption Schedule is July 20, 2012 at 4:00 p.m. prevailing Eastern Time. Any objections must: (a) be made in writing; (b) conform to the Bankruptcy Rules, the Local Rules, and any orders of the Bankruptcy Court; (c) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the cure amount listed in this Notice that would resolve such objection; and (d) be filed with the Bankruptcy Court (contemporaneously with a proof of service) and served upon the following parties so as to be actuallv received by July 20, 2012 at 4:00 p.m. prevailing Eastern Time:
01 12294744.1 SHEARMAN & STERLING LLP YOUNG CONWAY THE OFFICE OF THE UNITED Attn: Douglas P. Bartner, Esq. STARGATT & TAYLOR, LLP STATES TRUSTEE FOR THE Attn: Robert Britton, Esq. Attn: Pauline K. Morgan, Esq. DISTRICT OF DELAWARE 599 Lexington Avenue Attn: Kenneth J. Enos, Esq. Attn: David Klauder New York, New York 10022 Rodney Square 844 King Street, Suite 2207 Co-Counsel to the Foreign 1000 North King Street Wilmington, Delaware 19801 Representative Wilmington, Delaware 19801 Co-Counsel to the Foreign Representative
MORRIS, NICHOLS, ARSHT & WACHTELL, LIPTON, BALLARD SPAHR LLP TUNNELL LLP ROSEN & KATZ LLP Attn: Matthew G. Summers, Esq. Attn: Derek C. Abbott Attn: Richard G. Mason, Esq. 919N. Market Street, 11th Floor 1201 North Market Street, 18th Floor Attn: Joshua A. Feltman, Esq. Wilmington, Delaware 19801 Wilmington, Delaware 19899 51 West 52" Street Counsel to the Proposed Purchaser Co-Counsel to the Debtors'repetition New York, NY 10019 Secured Lenders and DIP Lenders Co-Counsel to the Secured Debtors'repetitionLenders and DIP Lenders
PLEASE TAKE FURTHER NOTICE THAT any counterparty to an Assigned Contract that fails'to object timely to the proposed assumption or cure amount set forth on Schedule I will be deemed to have agreed to such assumption and cure amount without any further order of or action by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CONNECTION WITH THK SALE OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHER BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THK DATE THAT THE DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
01.12294744 i 189
Dated: Wilmington, Delaware SHEARIvIAN & STERLING LLP July 18, 2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONA WAY STARGATT & TAYLOR, LLP
Is/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Representative
01:12294744.1
5 190
SCHEDUI E 1 TO THE CONTRACT ASSUMPTION NOTICE
Second Supplemental Assumption Schedule
01'12294744.1 Ad dmm of counterparty Line'8 ":. Addiess ofCoprf[efpa'rt[f Une 4,, R~BWKA&4 "'7't "::"'-"."-:::!..%4;-'':;"~~i%"Li'~'i"-'':::::!;"-.-"': ";::: Cinram 1 Inc. General Electnc Capital Corporation Equipment Lease Agreements 1010Thomas Edison Blvd SW Cedar Rapids 52404 L 7:;"'ltPl",;31657 43 7630842-001 2 Cinram, Inc. Crown Credn Company Lease Schedule No. 40189774 115 NORTH MAIN STREET New Bremen OH 45869 ',.&&, t; .';:.r":$9278vgd [2[ pursuant to the terms of the Master Lease Agreement 3 Cinram, Inc Crown Credit Company Lease Schedule No. 40201869 115 NORTH MAIN STREET New Bremen OH 45869 tncfud'ed,i0'.cohttadtA, [1[ pursuant to the terms of the Master Lease Agreement and Purchase Option Rider to Lease Schedule 4 Cinram, Inc. Yale Leasing - NMHG Finanaal Services, Inc Master Lease Agreement No 10 Riverwew Dnve Danbury 8487075 5 Cinram, Inc Twentieth Century Fox Home Entertainment LLC Faality Sublease Agreement 2121Avenue of the Stars, Suite 1441Attn: Los Angeles Twentieth Century Fox Home Entertainment Laura Cook Canada Limited
Notes f1[ Thu contract was included in the anginal "Notice of Proposed Potential Assumption and Assignment'of Certain Executory Contracts and Unexpired Leases in Connection with theSale ofSubstantial Assets of the Debtors." The Cure Amounts noted in this amended schedule reflect a revised cure amount reached after discussion between the parties I This is Exhibit "H" referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of ust, 2012.
A Commissioner for faking Affidavits
JONATHAN ROSS EOGE, a Commissioner, etc., Provloce ot Otttarfo, while a Studeot-at-law. Expires May 6, 20t4. IN THK UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re Chapter 15
CINRAM INTERNATIONAL INC., et Case No. 12-11SS2(KJC)
al.,'ebtors in a Foreign Proceeding. Jointly Administered
Ref. Docket Nos. 50, 59 and 65
THIRD SUPPLEMENT TO NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THK SALE OF SUBSTANTIAL ASSETS OF THE DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative (the "Foreign Representative" ) for the above-captioned debtors (collectively, the '-'De'btoi's") fil'ed the Foreign Representative 's Motion for Entry ofan Order (I) Recognizt'ng fhe Canadian Sale Order, (II) Authorizing and Approving the Sale Free and Clear ofLiens, Claims, Encumbr'ances, and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief (Dkt. No. 9) (the "Motion" ) in the United Statgs Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PLEASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America,
PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 ofthe United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801, on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M IB 2W3, Canada.
01.12302899.1 the territorial jurisdiction ofthe United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser, among others, ~an of the executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Third Supplemental Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Third Supplemental Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assign a contract is subject to change by the Purchaser. Specifically, among other things, the Purchaser has reserved all rights with respect to removing any executory contract or unexpired lease from the Third Supl31emental Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list ofthe Assigned Contracts that were actually assumed and assigned to the Purchaser at closing with the Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you are a parfy-to an Assigned Contract listed on the Third Supplemental Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. If you have any questions about this Notice or the Third Supplemental Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court: FTI CONSULTING, INC., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P,O. Box 104, Toronto, ON MSK 168 Canada, toll free af 1-855-718-5255, fax 1-416-649-8601, or email Cinramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Third Supplemental Assumption Schedule to which you may be a party.
PLEASE TAKE FURTHER NOTICE THAT section 365(b)(1) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure„ any defaults under executory contracts and unexpired leases at the time of their assumption.
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the
& Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease.
Ol:12302899.1 Accordingly, the Debtors have conducted a thorough review of their books and records and have determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Third Supplemental Assumption Schedule. Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Third Supplemental Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Third Supplemental Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of the Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at: www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave., El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: http: //www.deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT the deadline for filing objections to the assumption and assignment of the Assigned Contracts and the associated cure amount listed in the Third Supplemental Assumption Schedule is July 20, 2012 at 4:00 p.m. prevailing Eastern Time. Any objections must: (a) be made in writing; (b) conform to the Bankruptcy Rules, the Local Rules, and any orders of the Bankruptcy Court; (c) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the cure amount listed in this Notice that would resolve such objection; and (d) be filed with the Bankruptcy Court (contemporaneously with a proof of service) and served upon the following parties so as to be actuallv received by July 20, 2012 at 4:00 p.m. prevailing Eastern Time:
01:12302899.]
3 SHEARMAN & STERLING LLP YOUNG CONWAY THE OFFICE OF THE UNITED Attn: Douglas P. Bartner, Esq. STARGATT & TAYLOR, LLP STATES TRUSTEE FOR THE Attn: Robert Britton, Esq. Attn: Pauline K. Morgan, Esq. DISTRICT OF DELAWARE 599 Lexington Avenue Attn: Kenneth J. Enos, Esq. Attn: David Klauder New York, New York 10022 Rodney Square 844 King Street, Suite 2207 Co-Counsel to ihe Foreign 1000 North King Street Wilmington, Delaware 19801 Representative Wilmington, Delaware 19801 Co-Counsel to the Foreign Representative
MORRIS, NICHOLS, ARSHT & WACHTELL, LIPTON, BALLARD SPAHR LLP TUNNELL LLP ROSEN & KATZ LLP Attn: Matthew G. Summers, Esq. Attn: Derek C. Abbott Attn: Richard G, Mason, Esq. 919N. Market Street, 11th Floor 1201 North Market Street, 18th Floor Attn: Joshua A. Feltman, Esq. Wilmington, Delaware 19801 Wilmington, Delaware 19899 51 West 52'treet Counsel to the Proposed Purchaser Co-Counsel to the Debtors'repetition New York, NY 10019 Secured Lenders and DIP Lenders Co-Counsel to the Secured Debtors'repetitionLenders and D/P Lenders
PLEASE TAKE FURTHER NOTICE THAT any counterparty to an Assigned Contract that fails'to object timely to the proposed assumption or cure amount set forth on Schedule I will be deemed to have agreed to such assumption and cure amount without any further order of or action by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CONNECTION WITH THK SALK OR OTHERWISK SHALL RESULT IN THK FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHKR MONETARY OR NONMONETARY (INCLUDING DEFAULTS QF PROVISIONS RESTRICTING THK CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHER BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THK DATE THAT THK DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
01 12302899.1 -- 197
Dated: Wilmington, Delaware SHEARMAN & STERLING LLP July 19, 2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Is/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Represeritative
01:12302899 1 SCHEDULE I TO THE CONTRACT ASSUMPTION NOTICE
Third Supplemental Assumption Schedule
01.12302899.1 1 Cinram Manufacturing LLC Wafer Reclaim Services, LLC Purchase Agreement Michelle Hannah WRS Materials 5250 Neil Road, Suite 101 Reno, NV 89502 2 Cinram Thompson Lift Truck Co. Lift Truck Rental Contract 2222 Pinson Highway PO Box 10367 Birmingham, AL 35202
Notes: [1] The noted contracts were included in the "Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors." The Cure Amounts, noted in this schedule reflect updated amounts after a meet and confer between the parties.
This is Exhibit "I"referred to in the
affidavit of John H. Bell
sworn before me, this
14'ay of August, 2012.
A Commissioner ferrfI'aking Affidavits
JONATHAN ROSS EDGE, a f, Cornrnissioner, etc„Province ot Ontario, while a Student-at-Law. Expires May 5. 2034. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re Chapter 15
CINRAM INTERNATIONAL INC., et Case No. 12-11SS2(KJC)
al.,'ebtors in a Foreign Proceeding. Jointly Administered
Ref. Docket Nos. 50, 59, 65 and 69
FOURTH SUPPLEMENT TO NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THE SALE OF SUBSTANTIAL ASSETS OF THK DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative (the "Foreign Representative" ) for the above-captioned debtors (collectIv~ly till'-'-'Debtors" ); filed the Foreign Representative 's Motion for Entry ofan Order (I) Recognizirig'the.,Canadian Spic, Order, (II) Authorizing and Approving the Sale Free and Clear ofLiens, Claims, Ericumbrances, and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief (Dkt. No. 9) (the "Motion" ) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PLEASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America.
PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 of the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801, on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (I) Cinram Retail Services LLC (1741); (g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M I B 2W3, Canada.
01:12305385.1 the territorial jurisdiction of the United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser, among others, ~an of the executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Fourth Supplemental Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Fourth Supplemental Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assign a contract is subject to change by the Purchaser, Specificallv, among other things, the Purchaser has reserved all rights with respect to removing any executorv contract or unexoired lease from the Fourth Sunnlemental Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list of the Assigned Contracts that were actuallv assumed and assigned to the Purchaser at closing with the Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you are a party=to an Assigned Contract listed on the Fourth Supplemental Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. If you have any questions about this Notice or the Fourth Supplemental Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court: FTI CONsULTING, INC., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P.O. Box 104, Toronto, ON MSK 1G8 Canada, toll free at 1-855-718-5255, fax 1-416-649-8601, or email Cinramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Fourth Supplemental Assumption Schedule to which you may be a party.
PLEASE TAKE FURTHER NOTICE THAT section 365(b)(1) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure, any defaults under executory contracts and unexpired leases at the time of their assumption.
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease.
01:12305385.1 Accordingly, the Debtors have conducted a thorough review of their books and records and have determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Fourth Supplemental Assumption Schedule. Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Fourth Supplemental Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Fourth Supplemental Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy ofthe Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at: www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave., El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: http: //www.deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT the deadline for filing objections to the assumption and assignment of the Assigned Contracts and the associated cure amount listed in the Fourth Supplemental Assumption Schedule is July 20, 2012 at 4:00 p.m. prevailing Eastern Time. Any objections must: (a) be made in writing; (b) conform to the Bankruptcy Rules, the Local Rules, and any orders of the Bankruptcy Court; (c) state with particularity the legal and factual basis for the objection and if practicable, a proposed modification to the cure amount listed in this Notice that would resolve such objection; and (d) be filed with the Bankruptcy Court (contemporaneously with a proof of service) and served upon the following parties so as to be actuallv received by July 20, 2012 at 4:00 p.m. prevailing Eastern Time:
01.12305385 I
3 SHEARMAN & STERLING LLP YOUNG CONWAY THE OFFICE OF THE UNITED Attn: Douglas P. Bartner, Esq. STARGATT & TAYLOR, LLP STATES TRUSTEE FOR THE Attn: Robert Britton, Esq. Attn: Pauline K. Morgan, Esq. DISTRICT OF DELAWARE 599 Lexington Avenue Attn: Kenneth J. Enos, Esq. Attn: David Klauder New York, New York 10022 Rodney Square 844 King Street, Suite 2207 Co-Counsel to the Foreign 1000 North King Street Wilmington, Delaware 19801 Representali ve Wilmington, Delaware 19801 Co-Counsel to the Foreign Representative
MORRIS, NICHOLS, ARSHT & WACHTELL, LIPTON, BALLARD SPAHR LLP TUNNELL LLP ROSEN & KATZ LLP Attn: Matthew G. Summers, Esq. Attn: Derek C. Abbott Attn: Richard G. Mason, Esq. 919N. Market Street, 11th Floor 1201 North Market Street, 18th Floor Attn: Joshua A. Feltman, Esq. Wilmington, Delaware 19801 Wilmington, Delaware 19899 51 West 52'treet Counsel to the Proposed Purchaser Co-Counsel to the Debtors'repetition New York, NY 10019 Secured Lenders and DlP Lenders Co-Counsel to the Secured Debtors'repetitionLenders and DlP Lenders
PLEASE TAKE FURTHER NOTICE THAT any counterparty to an Assigned Contract that fails to object timely to the proposed assumption or cure amount set forth on Schedule I will be deemed to have agreed to such assumption and cure:, amount without any further order of or action by the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CONNECTION WITH THK SALE OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY (INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THK CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHKR BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THK DATE THAT THK DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
01:12305385.1 Dated: Wilmington, Delaware SHEARMAN k STERLING LLP July 20, 2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONAWAY STARGATT k TAYLOR, LLP
Is/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Repvesentative
01 12305385.1
5 206
SCHEDULE 1 TO THK CONTRACT ASSUMPTION NOTICE
Fourth Supplemental Assumption Schedule
01.12305385.1 Supplement No. 4 to Assumed Contracts List
1 Cinram&anufacturing Park Place Technologies ~ Maintenance Service Agreement 8401 Chagrin Road,„:.;;;::.;"~:;;:-'.,~';.;.;,$61;110,,20 [1],[2] Cleveland, OH 44023 2 Cinram International inc. Park Place Technologies Maintenance Service Agreement 8401 Chagrin Road ,'L'4~":Pl",",;-:„',2'$?3;31030: [1],[2] Cleveland, OH 44023
Notes: [1] The noted contracts were included in the "Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors." The Cure Amounts noted in this schedule reflect updated amounts after a meet and confer between the parties.
(2] The Cure Amounts set forth in this schedule are subject to downward adjustment by the Debtors for all amounts paid by the Debtors after june 25, 2012 on account of amounts owing to the Contract Counter-Party or its affiliates. I' This is Exhibit "J"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of A ust, 2012.
A Commiy(ioner forsaking Affidavits
„JONATHAN ROSS EDGE, a Commissioner, etc., Province of Ontario, while a Student-at-Law. Expirea May 6, RON, IN THK UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
X In re Chapter 15
CINRAM INTERNATIONAL INC., et Case No. 12-11SS2(KJC)
al.,'ebtors in a Foreign Proceeding. Jointly Administered
0 Ref. Docket Nos. 50,59,65,69 and 78
FIFTH SUPPLEMENT TO NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMKNT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THE SALE OF SUBSTANTIAL ASSETS OF THE DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative (the Foreign Representative" ) for the above-captioned debtors (collectively, the:"Debtors"), filed the Foreign Representative 's Motion for Entry ofan Order (I) Recognizing: the Canadian Sale Order, (II) Authorizing and Approving the Sale Free and Clear ofLiens, Claims, Enc'umbrances, and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief (Dkt. No. 9) (the "Motion" ) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PLEASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America.
PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 of the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801,on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each of the Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M IB 2W3, Canada.
01:12305385 1 the territorial jurisdiction of the United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser, among others, ~an of the executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Fifth Supplemental Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Fifth Supplemental Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assign a contract is subject to change by the Purchaser. Specifically. among other thing's. the Purchaser has reserved all rights with respect to removing anv executory contract or unexpired lease from the Fifth Supplemental Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list of the Assigned Contracts that were actual'ly assumed and assigned to the Purchaser at closing with the Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you are a party'o an Assigned Contract listed on the Fifth Supplemental Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. If you have any questions about this Notice or the Fifth Supplemental Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court: FTI CoNsULTING„ INC., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P.O. Box 104, Toronto, ON M5K 1G8 Canada, toll free at 1-855-718-5255, fax 1-416-649-8601,or email Cin ramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Fifth Supplemental Assumption Schedule to which you may be a party.
PLEASE TAKE FURTHER NOTICE THAT section 365(b)(1) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure, any defaults under executory contracts and unexpired leases at the time of their assumption.
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the 1 Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease.
01.12305385.1 Accordingly, the Debtors have conducted a thorough review of their books and records and have determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Fifth Supplemental Assumption Schedule. Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Fifth Supplemental Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Fifth Supplemental Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of the Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at = www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave., El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: http: //www.deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CONNECTION WITH THK SALK OR OTHERWISK SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY (INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHER BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THE DATE THAT THE DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
01 12305385.1
1 3 Dated: Wilmington, Delaware SHEARMAN & STERLING LLP July 23, 2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONA WAY STARGATT & TAYLOR, LLP
/s/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Representative
01:12305385.1 —213
SCHEDULE 1 TO THE CONTRACT ASSUMPTION NOTICE
Fifth Supplemental Assumption Schedule
01.12305385.1 Supplement No. 5 to Assumed Contracts List
Ref "'in'ra'm.'Party";;: . :, Counterparty " ',,", .:,",.";,',.'::;,:,'.:;:.,',i;;";.;;;;;,;,;,'.'~!2Tjt[e'of&'A'greemeijt'-"';;;.':„':,.'„&c,".i;,,".;g:;:':;i;::,.z"'"x;„'*'1:Addies'ssofvCo'u'nterf'[arty '. No.. ' Cinram, Inc, Raymond Leasing Corporation Raymond Leasing Corporation Schedule A 1955 Montreal Road ,;.'i".;a~~,'."'.!;-'~4~43'6'3„",14; [1] Agreement Number 2100736 Tucker, GA 30084-5218
2 Cinram, Inc. Raymond Leasing Corporation Raymond Leasing Corporation Schedule A 1955 Montreal Road Agreement Number 2100737 Tucker, GA 30084-5218
3 Cinram, Inc. Raymond Leasing Corporation Raymond Leasing Corporation Schedule A 1955 Montreal Road Agreement Number 2100738 Tucker, GA 30084-5218
4 Cinram Distribution LLC Raymond Leasing Corporation Raymond Leasing Master Lease 30280 1955 Montreal Road Tucker, GA 30084-5218
5 Cinram International Inc. Alliance Films inc. Letter Agreement re: DVD Replication and 145 King Street East, 3rd Floor, Toronto Distribution Services Agreement, as amended on ON MSC 2Y7 July 17, 2012.
=Notes: [1[ The noted contracts were included in the "Notice of proposed potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors." The Cure Amounts noted in this schedule reflect updated amounts after a meet and confer between the parties.
[2[ The noted contract was included in the "Notice of proposed potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors," under Reference No. 397 and 398. The Cure Amounts noted in this schedule reflect updated amounts after an amendment accepted and agreed to by the parties on July 17, 2012. The Cure Amount set forth is subject to downward adjustment by the Debtors for all amounts paid by the Debtors subsequent to the date of the amendment. I This is Exhibit "K"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of t, 2012.
A Commissioner for 'Yaking Affidavits
„JONATHAN ROSS EDGE, a Gommiaaioner, etc., Province ot Ontario, while a Student. at-law. Expiree May 5, 2014. IN THE UNITED STATES BANKRUPTCY COURT FOR THK DISTRICT OF DELAWARE
In re Chapter 15
CINRAM INTERNATIONAL INC., et Case No. 12-11882(KJC)
aL,'ebtors in a Foreign Proceeding. Jointly Administered
Ref. Docket Nos. 50,59,65,69,78 and 85
SIXTH SUPPLEMENT TO NOTICE OF PROPOSED POTENTIAL ASSUMPTION AND ASSIGNMKNT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THE SALK OF SUBSTANTIAL ASSETS OF THE DEBTORS
PLEASE TAKE NOTICE THAT on June 25, 2012, Cinram International ULC, in its capacity as the authorized foreign representative (the "Foreign Representative" ) for the above-captioned debtors (collectively, the-",Debtors" ), filed the Foreign Repvesentative 's Motion fov Entry ofan Order (I) Recognizing the, Canadian Sale Ordev, (II) Authovizing and Approving the Sale Free and Clear ofLiens, Claims, Encumbrances,'and Other Interests, (III) Authorizing the Assumption and Assignment ofCertain Executory Contracts and Unexpived Leases, and (IV) Gvanting Related Relief (Dkt. No. 9) (the "Motion" ) in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court" ).
PLEASE TAKE FURTHER NOTICE THAT on July 12, 2012, the Ontario Superior Court of Justice (the "Canadian Court" ) will consider the proposed Approval and Vesting Order (the "Canadian Sale Order" ) approving the sale of substantially all of the property and assets used in connection with the business carried on by the Debtors in North America.
PLEASE TAKE FURTHER NOTICE THAT the Bankruptcy Court has scheduled a hearing before the Honorable Kevin J. Carey in Room 5 of the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801,on July 25, 2012 at 10:00a.m. (prevailing Eastern time) to consider the relief requested by the Foreign Representative in the Motion and any timely filed objections thereto.
PLEASE TAKE FURTHER NOTICE THAT the Motion contemplates that in addition to the sale of assets to be approved by the Canadian Sale Order, upon approval of the Motion by the Bankruptcy Court, the Debtors will be authorized to sell certain of their assets located within
The last four digits of the United States Tax Identification Number or Canadian Business Number, as applicable, of each ofthe Debtors follow in parentheses: (a) Cinram International Inc. (4583); (b) Cinram (U.S.)Holding's Inc. (4792); (c) Cinram, Inc. (7621); (d) Cinram Distribution LLC (3854); (e) Cinram Manufacturing LLC (2945); (f) Cinram Retail Services LLC (1741);(g) Cinram Wireless LLC (5915); (h) IHC Corporation (4225); and (i) One K Studios, LLC (2132). The Debtors'xecutive headquarters is located at 2255 Markham Road, Toronto, Ontario, M I B 2W3, Canada.
01 12310148.1 the territorial jurisdiction of the United States (the "Sale") pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (the "APA") between Cinram International Inc. and Cinram Acquisition, Inc. (the "Purchaser" ).
PLEASE TAKE FURTHER NOTICE THAT upon the closing of the Sale following entry of the Canadian Sale Order and entry of a sale order by the Bankruptcy Court, the Debtors ~ma assume and assign to the Purchaser, among others, ~an ofthe executory contracts and unexpired leases (collectively, the "Assigned Contracts" ) identified on Schedule 1 hereto (the "Sixth Supplemental Assumption Schedule" ).
PLEASE TAKE FURTHER NOTICE THAT the Purchaser has not yet determined to designate any of the Assigned Contracts identified on the Sixth Supplemental Assumption Schedule for assumption and assignment. As set forth more fully in the Motion, the determination to assume and assign a contract is subject to change by the Purchaser. Specifically, among other things, the Purchaser has reserved all rights with respect to removing any executory contract or unexpired lease from the Sixth Supplemental Assumption Schedule.
PLEASE TAKE FURTHER NOTICE THAT the Debtors will file a final list of the Assigned Contracts that were actually assumed and assigned to the Purchaser at closing with the, Bankruptcy Court within one business day after the closing of the Sale.
PLEASE TAKE FURTHER NOTICE THAT you are receiving this notice (this "Notice") because the Debtors'ecords reflect that you are a party-to an Assigned Contract listed on the Sixth Supplemental Assumption Schedule. Therefore, you are advised to review carefully the information contained in this Notice. Ifyou have any questions about this Notice or the Sixth Supplemental Assumption Schedule and proposed cure amounts, you may contact the Monitor appointed by the Canadian Court; FTI CONSULTING, INC., TD Waterhouse Tower, 79 Wellington Street West, Suite 2010, P.O. Box 104, Toronto., ON MSK 168 Canada, toll free at 1-855-718-5255, fax 1-416-649-8601, or email Cinramfticonsulting.corn.
PLEASE TAKE FURTHER NOTICE that the Debtors currently are proposing to potentially assume an executory contract(s) or unexpired lease(s) listed on the Sixth Supplemental Assumption Schedule to which you may be a party.
PLEASE TAKE FURTHER NOTICE THAT section 365(b)(l) of the Bankruptcy Code requires the Debtors to cure, or provide adequate assurance that they will promptly cure, any defaults under executory contracts and unexpired leases at the time of their assumption.
Neither the exclusion nor inclusion of any executory contract or unexpired lease on the Assumption Schedule shall constitute an admission by the Debtors that any such contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any Debtor(s) has any liability thereunder, or that such executory contract or unexpired lease is necessarily a binding and enforceable agreement. Further, the Debtors expressly reserve the right to (a) remove any executory contract or unexpired lease from the Assumption Schedule, in coordination with the Purchaser as stated above, and reject such executory contract or unexpired lease and (b) contest any claim (or cure amount) asserted in connection with the assumption of any executory contract or unexpired lease. -- 218
Accordingly, the Debtors have conducted a thorough review of their books and records and have determined the amounts required to cure defaults, if any, under the executory contract(s) or unexpired lease(s), which amounts are listed on the Sixth Supplemental Assumption Schedule. Please note that if no amount is stated for a particular executory contract or unexpired lease, the Debtors believe that there is no cure amount outstanding for such contract or lease.
PLEASE TAKE FURTHER NOTICE THAT the Debtors reserve all rights with respect to amending the Sixth Supplemental Assumption Schedule, including any necessary changes to the proposed cure amounts listed.
PLEASE TAKE FURTHER NOTICE THAT absent any pending dispute, the monetary amounts required to cure any existing defaults arising under the executory contract(s) or unexpired lease(s) identified on the Sixth Supplemental Assumption Schedule will be satisfied by the Purchaser in cash upon the closing of the Sale. In the event of a dispute, however, payment of the cure amount would be made following the entry of a final order resolving the dispute and approving the assumption. If an objection to the proposed assumption or related cure amount is sustained by the Bankruptcy Court, the Debtors may elect to reject such executory contract or unexpired lease, in coordination with the Purchaser, instead of assuming it.
PLEASE TAKE FURTHER NOTICE THAT if you would like to obtain a copy of the Motion, the Canadian Sale Order, the APA, or any related documents, you should contact Kurtzman Carson Consultants LLC, the claims and noticing agent retained by the Debtors in these chapter 15 cases, by: (a) visiting the Debtors'estructuring website at; www.kccllc.net/cinram; (b) e-mailing the Debtors at [email protected], and/or (c) writing to Cinram Claims Processing c/o Kurtzman Carson Consultants LLC, 2335 Alaska Ave., El Segundo, CA 90245. You may also obtain copies of any pleadings filed in these chapter 15 cases for a fee via PACER at: http: //www.deb.uscourts.gov.
PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE IN CONNECTION WITH THE SALE OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY (INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THK CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, OR OTHER BANKRUPTCY-RELATED DEFAULTS) ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THE DATE THAT THE DEBTORS ASSUME SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE.
01 12310148 1
3 Dated: Wilmington, Delaware SHEARMAN & STERLING LLP July 24, 2012 Douglas P. Bartner Jill Frizzley Robert Britton 599 Lexington Avenue New York, New York 10022 Telephone: (212) 848-4000 Facsimile: (646) 848-8174
-and-
YOUNG CONAWAY STARGATT & TAYI.OR, LLP
Is/Kenneth J. Enos Pauline K. Morgan (No. 3650) Kenneth J. Enos (No. 4544) Rodney Square 1000 North King Street Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253
Co-Counsel to the Foreign Representative
01:123101481 SCHEDULE 1 TO THE CONTRACT ASSUMPTION NOTICE
Sixth Supplemental Assumption Schedule
01.12310148.1 Supplement No. 6 to Assumed Contracts List
'" 1 Cinram International Inc. Koninklijke phifips Electronics N.v. DVD Video Disc and DVD ROM Disc patent License pO Box 80002 ,"-:-",~~@it 457]]v ~44 [1] Agreement Building SFF-8 5600 18 Eindhoven The Netherlands 2 Cinram International Inc. Koninklijke Philips Electronics N.V. Side Letter to DVD Video Disc and DVD ROM Disc PO Box 218 fnr)itdi.i~i[n~~4p' „[1] Patent License Agreement 5600 MD Eindhoven The Netheriands 3 Cinram International Inc. Koninklijke Philips Electronics N.V. Side Letter to DVD Video Disc and DVD ROM Disc PO Box 218 theft]d'eid'.„(j;,No 'g (1] Patent License Agreement 5600 MD Eindhoven above".".',i:,„~jgg9: & ~',, The Netherlands 4 Cinram International inc. Koninklijke Philips Electronics N.V CD Disc Patent License Agreement PO Box 80002 "ag" 'AF" 9&'82,[l2 Building SFF-8 5600 JB Eindhoven The Netherlands 5 Cinram International Inc. Koninklijke Philips Electronics N.V Side Letter to CD Disc Patent License Agreemeot PO Box 218 lii'ciu'de'di'I,'";NN'o~)4l'iig+s„[2] 5600 MD Eindhoven The Netherlands 6 Cinram Ltd. Oracle Canada ULC Technical Support Services Contract Number H Anca Boldea 5002960-006 Oracle Canada ULC PO Box 4598 Postal Station A Toronto, Ontario M5W 4Y3 7 Cinram International inc. Oracle Canada ULC Technical Support Services Contract Number H Anca Boldea 0'0'0 5002960-005 Oracle Canada ULC PO Box 4598 Postal Station A Toronto, Ontario MSW 4Y3 8 Cinram International Inc. Oracle Canada ULC Technical Support Services Contract Number H Anca Boldea 5002960-003 Oracle Canada ULC PO Box 4598 Postal Station A Toronto, Ontario MSW 4Y3 9 Cinram Manufacturing Oracle Corporation Oracle License and Services A'greement V122304- PO Box 44471 15502661-28-FEB-2005 San Francisco, CA 94144 10 Cinram Manufacturing Oracle USA, Inc. Oracle License and Services Agreement 500 Oracle Parkway OLSAv122304-11502661-28-FEB-2005 Redwood City, CA 94065 11 Cinram Manufactunng Oracle USA, Inc Oracle Term License Lease Schedule 500 Oracle Parkway Redwood City, CA 94065 i-''s"- 12 Cinram Manufactunng Oracle Corporation En!erpnse Linux and Oracle VM Services PO Box 71028 ;.": '; "'"~i)0;"06 Ag" i=ment v111407 Chicaa, n L $60694 Ref;, Cinram Party Ccounterparty,.-":;..,'„:",',,';;".i i::;:,'-,;...'-&".„,',-,."-„'.",,"'''',:Title:,o'f Agiejiiie'n't'-;"::-,:;;.~ ."-.-'":-.~„::;;;',;" .,;";,Addtessof, Cou'nterpa'rt'y,; No,''3 Cinram, Inc. Raymond Leasing Corporation Raymond Leasing Corporation Schedule A Master Raymond Leasing Corporation Lease 21007, Schedule 2100736 Accounts Recewable Manager Risk Management 20 South Canal Street Greene, NY 13778
14 Cinram, Inc. Raymond Leasing Corporation Raymond Leasing Corporation Schedule A Master Raymond Leasing Corporation Lease 21007, Schedule 2100737 Accounts Receivable Manager Risk Management 20 South Canal Street Greene, NY 13778
15 Cinram, inc. Raymond Leasing Corporation Raymond Leasing Corporation Schedule A Master Raymond Leasing Corporation Lease 21007, Schedule 2100738 Accounts Receivable Manager 1 Risk Management 20 South Canal Street Greene, NY 13778
16 Cinram Distribution LLC Raymond Leasing Corporation Raymond Leasing Master Lease 30280 Raymond Leasing Corporation Accounts Receivable Manager Risk Management 20 South Canal Street Greene, NY 13778 IvpÃwXXXXX+q
[1] The listed cure amount, which is related to certam royalty liabilities that are calculated on a quarterly basis, is subject to upward or downward adjustment pnor to the applicable date of assumption in accordance with the normal business practices of the parties.
[2] The listed cure amount is disputed by Philips. The Parties have agreed that this amount will be resolved consensually or by the Bankruptcy Court prior to assumption and assignment of the hsted contract.
[3] The noted contracts were included in the "Notice of Proposed Potential Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale of Substantial Assets of the Debtors." The Cure Amounts noted in this schedule reflect updated amounts after a meet and confer between the parties. I This is Exhibit "L"referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
A Commissioner for Caking Affidavits
JONATHAN ROSS EDGE, a Commissioner, etc., Province of Ontario, while a Student.at-Law. Eapiraa May 5, SO&a. —224 12
Court File No. cv12-9767-OOCL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THK COMPANIES'REDITORS ARRA1VGEMEXT ACT, R.S.C.1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGKMKNT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THK COMPANIES LISTED IN SCHEDULE "A."
Applicants
AFFIDAVIT OF JOHN BELL (sworn J'nne 23, 2012) -j 225
TABLE OF CONTENTS
I.~ INTRODUCTION e ~ ~ eeeoee ~ ~ ~ eeoc eeeeeo ee eeoc ee ~ ~ eee ee ~ ee ~ ~ ~ eee ~ ~ eee ~ oee ~ ~ eo ~ ee ~ oe ~ ~ e 1
I.I. BACKGROUND.. ~ ~ \ ~ ~ e ~ e ~ ee ~ ~ e ~ \ eee ee ~ ~ ~ \ ~ ~ ~ ~ e ~ ~ ~ ~ \ee ~ e ~ e ~ e ~\ ~ eeeeee ~ e ~ \ e ~ ~ ~ ~ ~ ~ eee 7
%To (A) History of the Cinram Group...... ,...... ,...... ,....,...... 9 (B) The Cinram Business...... ,...... ,...... ,.....11
(i) Overview.
(ii) Business Segments. ...13
(a) Pre-recorded Multimedia Products... 13
(b) Video Game..
(c) Other 17
(iii) Customers...... '..
(iv) Offices and Facilities. ..19
(v} Employees, ....19
(a) Employees by Region.. ,19
(b) Collective Agreements. 20
(c) Pension Plans.
(d) Other Employee Benefit Plans 22
(e) Key Employee Retention Program.
(C) Corporate Structure and Financial Position of the Cinram Group...... ,...... Z3
(i) Canadian Applicants or CCAA Party. 27
(ii) U.S. Applicants. 3D
(iii) European Entities ...36
(D) Credit Agreements...... ,. ~ eeee ~ ~ ~ e ~ e e eel ~ ~ ~ ~ ~ ~ ~ ~ * 38
(i) Refinancing and Recapitalization. 38
(ii) Mandatory Exchange of Second Lien Debt .....39 —226
(iii) Amendments to the Credit Agreements. 39
{a) August 2011 Amendment
(b) Waivers to Credit Agreements.
(K) The Need for Relief....,...... ,...... ,...„,...... 40
(i) Economic Challenges.
(ii) Challenges under the Credit Agreements
(F) Restructuring Efforts to Date. .43
(i) Consolidation/Cost Reduction. ....43
(ii) Recapitalization Efforts. 45
(iii) Strategic Review Process. .45
(iv) Proposed Transaction 48
(v) Support Agreement...... 50
III CCAA PROCEEDINGS oo ~ osooooeooeo eooooo ~ oooooeoo ~ ~ ~ ~ oeoeeooeoo ~ ~ ~ ~ sess ~ ~ o ~ ~ ~ esses ~ ~ ~ ~ 51
(A) The Applicants are Insolvent for the Purposes of the CCAA ...... ,.....51
(B) Stay of Proceedings under the CCAA ...,...... ,...... ,~ ..,....„...... 53
(C) The Monitor...... „...,....,...... ~....,...... ,.....,...... 54
(D) Chapter 15 Proceedings ...... ,~ oo oooooooo esses' osooosoooooooooeo ~ esse 55
(K) Funding of the Cinram Group ...... ~ .. ~ ~ ooooeooeeoo ~ ~ oooe ~ ~ ~ sess 59
(i) Cash Flow Forecast ....59
(ii) DIP Financing...... 59
{iii) Cash Management System .....62
(F) Payments during the CCAA Proceedings .....,...... 65 (i) Payments for Shared Services .. ...66 (ii) Critical Suppliers.
(iii) Customer Programs ,....69 15
{6) Key Employee Retention Program ...... 76
(i) KERP Payments ......
(ii) Aurora Facility Retention Payments. .?3
(iii) KERP Charge ...... ,...... ,....,.....
{8) Trustee, Director and Officer Protections ...... ,..„...... ,...... 74 {I} Priorities of Charges...,...... „....,.....,.76
IV CONCLUSION o e ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ tt ~ ootttt ~ ~ ~ t ~ @to eotee ~ ~ re ~ Ite ~ ~ ~ ~ ~ ~ ~ 77 -- 228 16
Court File No. Cvj.2 —9767 —00CL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THK COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGKMKNT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A"
Applicants
AFFIDAVIT OF JOHN BELL (sworn June 23, 2012)
I, John Bell, of the City of Toronto, in the Province of Ontario, MAKE OATH AND SAY:
I. INTRODUCTION
I am the Chief Financial Officer of Cinram International Inc, ("CII"). I am also a
director and/or an officer of certain of the subsidiaries that are owned either directly or indirectly
by CII. As such, I have personal knowledge of the matters to which I depose in this Affidavit.
Where I do not possess personal knowledge, I have stated the source of my information and in all
such cases believe it to be true.
This Affidavit is sworn in support of a motion for an Initial Order protecting CII,
Cinram International Income Fund ("Cinram Fund" ), CII Trust and the companies listed in "A" Schedule hereto (collectively, the "Applicants" ) from their creditors pursuant to the
Comptinies'reditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA").
While Cinram International Limited Partnership ("Cinram LP", together with the Applicants, -2- the "CCAA Parties" ) is not an Applicant in these proceedings, the Applicants seek to have a stay of proceedings and other relief under the CCAA extended to Cinram LP as it forms a part of the income trust structure with Cinram Fund, the ultimate parent of the Cinram Group (defined below), the remaining entities of which are all Applicants in these proceedings.
Cinram Fund, collectively with its direct and indirect subsidiaries, shall be referred to herein as "Cinram" or the "Cinrarn Group". A copy of the Cinram corporate chart is attached hereto as Exhibit "A",
Cinram Fund, CII, Cinram International General Partner Inc. ("Cinram GP"), CII
Trust, Cinram International ULC ("Cinram VLC") and 1362806 Ontario Limited ("1362806") are the Canadian entities in the Cinram Group that are Applicants in these proceedings
(collectively, the "Canadian Applicants" ). Cinram (U.S,) Holding's Inc. ("CVSH"), Cinram,
Inc,, IHC Corporation ("IHC"), Cinram Manufacturing LLC ("Cinram Manufacturing" ),
Cinram Distribution LLC ("Cinram Distribution" ), Cinram Wireless LLC ("Cinram
Wireless" ), Cinram Retail Services, LLC ("Cinram Retail" ) and One K Studios, LLC ("One
K") are the U.S. entities in the Cinram Group that are Applicants in these proceedings
(collectively, the "V.S. Applicants" ). All of the CCAA Parties, with the exception of Cinrarn
Fund, Cinram GP, CII Trust and Cinram LP (collectively, the "Fund Entities" ), are Borrowers and/or Guarantors under the Credit Agreements (defined below). There are also several
European entities that form part of the Cinram Gioup, certain of which are Guarantors under the
Credit Agreements. Cinram's European entities are not part of these proceedings.
All dollar amounts expressed herein, unless otherwise noted, are in United States currency. —230
The principal objectives of these proceedings are: (i) to ensure the ongoing
operations of the Cinram Group; (ii) to ensure the CCAA Parties have the necessary availability
of working capital funds to maximize the ongoing business of the Cinram Group for the benefit
of its stakeholders; and (iii) to complete the sale and transfer of substantially all of Cinram's
business as a going concern (the "Proposed Transaction" ) to Cinram Acquisition, Inc, (the
"Proposed Purchaser" ) or one or more of its nominees.
7. In connection with the Proposed Transaction, (a) CII has entered into an Asset
Purchase Agreement dated June 22, 2012, with the Proposed Purchaser (the "Asset Purchase
Agreement" ) pursuant to which CII and certain other asset sellers listed therein (together with
CII, the "Asset Sellers" ) will sell, and the Proposed Purchaser will purchase, substantially all of
the assets used in connection with the Cinram Business in North America (other than certain
excluded assets) (the "Purchased Assets" ); and (b) the Proposed Purchaser has-provided to CII
and 1362806 (together, the "Share Sellers" ) a binding purchase offer dated June 22, 2012 (the
"Purchase Offer", together with the Asset Purchase Agreement, the "Purchase Agreement" )
pursuant to which the Proposed Purchaser will purchase the Cinram Business (defined below) in
Europe through the acquisition of all of the outstanding shares of Cooperatie Cinram Netherlands
UA (the "Purchased Shares" ), subject to the terms and conditions therein.
The Proposed Transaction allows Cinram to return to a market leader in the
industry. Cinram will be well positioned to increase its market share in the industry based on its
status as being the leading service provider and with an improved and normalized capital
structure. 231
The Proposed Transaction has the support of the lenders who are members of the steering committee with respect to Cinram's first lien credit facilities (the "Steering
Committee" ) and who have been subject to confidentiality agreements, representing approximately 40% of the loans under the First Lien Credit Agreement (as defined below),
Cinram anticipates further support of the Proposed Transaction from additional lenders under its credit agreements following the public announcement ofthe Proposed Transaction.
In connection with the Proposed Transaction, the Applicants intend to bring a motion in conjunction with the within application to be heard on a date to be set by this Court to, inter alia, approve the Proposed Transaction pursuant to the Purchase Agreement and, upon the
closing of the transactions contemplated by the Asset Purchase Agreeinent and Purchase Offer,
vest the right, title and interest in and to the Purchased Assets and the Purchased Shares in the
Proposed Purchaser, or one or more of its nominees, free and clear of liens a6d encumbrances,
other than permitted encumbrances (the "Sale Approval Motion" ). Further details with respect
to the Proposed Transaction are discussed below and will be set out in the affidavit filed in
support of the Sale Approval Motion.
Over the past several years, Cinram has continued to evaluate its strategic
alternatives and to rationalize its operating footprint in order to attempt to balance its ongoing
operations and financial challenges with its existing debt levels. Despite cost-reduction and
recapitalization initiatives and the implementation of a variety of restructuring alternatives, the
Cinram Group has been experiencing a number of challenges that have led to its seeking the
protections provided by the CCAA. These challenges include, among other things: —232
(a) significant declines in liquidity resulting from declining customer volumes,
reductions in pricing and decreasing EBITDA;
(b) the loss of a major customer contract;
(c) approximately $244.8 million of first and second lien term debt outstanding as at
March 31, 2012, with associated quarterly interest expense of approximately $7.6
million for the first quarter of 2012;
(d) $19 million outstanding under revolving credit facilities as at March 31, 2012,
with associated quarterly interest expense of approximately $1.4 million for the
first quarter of 2012; aqd
(e) approximately $12 million of letter of credit exposure relating to the first lien
credit facility.
12. In April 2011, Cinram completed a recapitalization transaction involving the
amendment and extension of its senior secured credit facilities and the exchange of a portion of
its first lien debt into mandatorily exchangeable second lien debt. However, continuing declines
in revenue and EBITDA left Cinrain in a position where it could not meet certain financial and
other covenants under its amended senior secured credit facilities. As a result, in 2011 and 2012,
Cinram and its senior lenders entered into a series of amendments and waivers, the latest of
which expires'as of June 30, 2012.
13. As part of its restructuring efforts and pursuant to the August 2011 Amendment
(defined below) to its credit facilities, in September 2011, Cinram engaged Moelis & Company 'I
LLC ("Moelis"), an investment bank, to assist Cinram in a review of strategic alternatives with -6- 233 the goal of maximizing value for Cinram's stakeholders, including a potential investment in the
Cinram Group, a safe transaction of all or substantially all of Cinram's assets, property, business and undertaking (collectively, the "Property" ), or a stand-alone transaction with Cinram's lenders. The strategic review process is further described in Section 11(F)(iii) below.
Throughout this strategic review process, Cinram has been working with its senior secured lenders and their advisors to assess and evaluate its restructuring options. This review of strategic alternatives has culminated in the Proposed Transaction.
Having regard to the financial circumstances of the Cinram Group, the CCAA
Parties have determined that it is necessary to seek protection under the CCAA in order to preserve enterprise value and continue as a going concern while seeking to implement the
Proposed Transaction and pursue a restructuring or other alternatives relating to their remaining assets and property. The CCAA Parties also intend to pursue certain limited in-process operational restructuring initiatives while under CCAA protection. Any such operational restructuring initiatives will be undertaken for the purpose of further improving the Cinram
Group's financial position and facilitating the Proposed Transaction.
15, The Applicants are proposing that the U.S. Applicants be included in these proceedings and it is not intended that any insolvency proceedings will be commenced with respect to Cinram's European entities, except for Cinram Optical Discs S.A.S. ("Cinram
Optical Discs"), which has commenced insolvency proceedings in France.
16. It is currently contemplated that these CCAA proceedings will be the priinary court-supervised restructuring of the CCAA Parties. The Cinram Group's integrated business, headquartered in Canada, is reliant on the shared management and operational services provided —234 -7- 22
by CII. Accordingly, it is in the best interests of the stakeholders to deal with the Cinram Group
on a consolidated basis through a single, centralized restructuring process. The Applicants are
seeking authorization for Cinram ULC to apply as foreign representative for recognition of these
proposed CCAA proceedings as "Foreign Main Proceedings" under Chapter 15 of the United
States Bankruptcy Code ("Chapter 15")as soon as practicable.
II. BACKGROUND
17. The CCAA Parties are part of a consolidated business in Canada, the United
States and Europe that is headquartered in Canada and operationally and functionally integrated
in many significant respects. Cinram is one of the world's largest providers of pre-recorded
multimedia products and related logistics services and is a leader in the industry for production,
service, delivery and customer satisfaction. With facilities in North America and Europe, Cinram
(i) manufactures DVDs, Blu-ray discs and CDs, and provides distribution services for motion
picture studios, music labels, video game publishers, computer software companies,
telecommunication companies and retailers around the world; (ii) provides various digital media
services through One K;, and (iii) provides retail inventory control and forecasting services
through Cinram Retail (collectively, the "Cinram Business" ).
18. As at December 31, 2011, the Cinram Group employed approximately 8,300
people worldwide, including contract and agency workers.
19. The Cinram Group's administrative functions and decision making functions are
centralized in Canada. All senior level customer contracts for Cinram's major international
customers are handled by CII, all strategic decision making is led by CII and all corporate
functions, such as financial planning, internal audit, financial reporting, and dealings with 23 -8-
Cinram's lenders, are managed in Canada. Additionally, North American cash management,
information technology, accounting, accounts receivable, accounts payable, insurance
procurement, marketing, treasury, real estate and tax services are provided predominantly by CII.
20. As described in greater detail below, the Cinram Group is financed primarily
through a term loan and revolving credit facilities under the Amended and Restated Credit
Agreement dated as of April 11, 2011, among CII, Cinram, Inc. and CUSH, as borrowers (the
"First Lien Borrowers"), the guarantors party thereto, the lenders from time to time party
thereto, and JPMorgan Chase Bank N.A., as administrative agent (as amended by that certain
Amendment No. 1 dated as of August 12, 2011, that certain Amendment No. 2 and Waiver dated
as of December 30, 2011 and that certain Amendment No. 3 and Waiver dated as of March 15,
2012, the "First Lien Credit Agreement" ) which amended and restated the credit agreement
dated May 5, 2006 (as amended as of March 22, 2007 and as of March 30, 2009, the "Original
Credit Agreement" ) {as further discussed below). As at March 31, 2012, there was
approximately $233 million outstanding under the term loan facility; $ 19 million outstanding
under the revolving credit facilities; and approximately $12 million of letter of credit exposure
under First Lien Credit Agreement.
21. CUSH, as borrower (collectively with the First Lien Borrowers, the "Borrowers"
and each a "Borrower" ) also entered into a mandatorily exchangeable Second Lien Credit
Agreement dated as of April 11, 2011,'mong Cinram ULC and the other guarantors party
thereto (collectively with the guarantors under the First Lien Credit Agreement, the
"Guarantors", and each a "Guarantor" ), the lenders from time to time party thereto
(collectively with the lenders party to the First Lien Credit Agreement, the "Lenders") and
JPMorgan Chase Bank N.A., as administrative agent (together with the administrative agent —236 -9- 24
under the First Lien Credit Agreement, the "Administrative Agent" ) (as amended by that
certain Amendment No. 1 dated as of August 12, 2011, that certain Amendment No. 2 and
Waiver dated as of December 30, 2011 and that certain Amendment No. 3 and Waiver dated as
of March 15, 2012, the "Second Lien Credit Agreement" ), pursuant to which the principal
amounts outstanding and a portion of the accrued interest were exchanged into units of Cinram
Fund in January 2012. Approximately $12 million of accrued interest remains outstanding under
the Second Lien Credit Agreement as of March 31,2012.
22. Each of the First Lien Credit Agreement and the Second Lien Credit Agreement
(together, the "Credit Agreements" ) has a maturity date of December 31, 2013. The senior
secured credit facilities are direct er guarantee obligations of certain North American and
European companies within the Cinram Group, including the CCAA Parties (with the exception
of the Fund Entities), and are secured by substantially all of the assets of the: Applicants and
certain of their European subsidiaries.
As a result of the financial challenges currently facing the Cinram Group, Cinram
is in unable to comply with certain financial and other covenants under the Credit Agreeinents
and Cinram's adjusted EBITDA is not sufficient to satisfy its obligations under the Credit
Agreements,
(A) History of the Cinram Group
24. CII was formed as Cinram Ltd./Cinram Ltee by letters patent dated July 28, 1969,
pursuant to the Canada Business Corporations Act. From its inception Cinram grew in part
through a number of strategic acquisitions, On May 5, 2006, CII converted from a corporate - 10- 237 structure to an income trust structure through a plan of arrangement that was approved by shareholders on April 28, 2006.
25. In April 2007, Cinram acquired substantially all of the assets of Ditan Corporation
("Ditan"), a leading video games distributor in the United States. Ditan specialized in direct-to- store and third-party logistics. During 2011, Ditan was merged into Cinram Distribution where its operations are conducted under the name Cinram Games™.
26. In September 2007, Cinram acquired the North American and European assets of
Vision Worldwide Management, LLC {"Vision'"), a leading provider of outsourced Vendor
Managed Inventory services to the home entertainment industry. Vision offers a web based supply chain management system that provides visibility, insight and analytical tools to various levels of the supply chain. The Vision™solution is used in both North America and Europe, In
2011, Vision changed its name to Cinram Retail Services, LLC.
In June 2008, Cinram acquired (i) substantially all of the UK assets and (ii) 100% of the shares of Spanish and French subsidiaries of ODS Business Services, a European replicator and distributor of DVDs, These acquisitions expanded Cinram's distribution capacity in Spain, France and the United Kingdom to service its DVD replication and distribution agreement with Universal Pictures.
28. In September 2008, Cinram completed the acquisition of substantially all of the
assets of the warehouse management, distribution, processing, and value-added service
operations of Jack of All Games, Inc. through Ditan. Following the merger of Ditan into Cinram
Distrihution descr'ibed above, these assets and operations, which involve the distribution of —238
products of third party software, hardware and accessories to retail outlets in North America,
formed part of Cinram Distribution's games distribution business.
29. On January 31, 2011, Cinram acquired Los Angeles-based digital media company
One K as part of a broad initiative to advance Cinram further into digital platforms. One K
specializes in building enhanced consumer experiences for movies, TV shows, music, books
and games. One K has been a key service provider to many of the world's top media and
technology companies. One K provides creative and technical services to the companies to help
them release their content in different venues, including digital downloads, mobile and tablet
applications, advanced Blu-ray discs, stereoscopic 3D and social media.
(B) The Cinram Business
(i) Overview
30. Cinram manufactures DVDs, Blu-ray discs and CDs, and provides distribution
services for motion picture studios, music labels, video game publishers, computer software
companies, telecommunication companies and retailers in North America and Europe. Cinram is
an industry leader with respect to production, distribution, service and customer satisfaction.
31. Cinram has long established itself as a leading replicator and distributor of CDs
and DVDs with a growing footprint in the emerging market for Blu-ray. Cinram has a diversified
operational footprint across North America and Europe that enables the Cinram Group to meet
the replication and logistics demands of its customers. Cinram's facilities are strategically
positioned to optimize Cinram's distribution capabilities across key media markets in North
America and Europe. 27 -12-
32. Cinram is engaged in an industry that is highly price-competitive„with a high
degree of customer concentration. Cinram's production levels and, in turn, revenue and cash
flows, are largely affected by the schedule according to which its major customers release their
products and the public demand for such products. In addition, the Cinram Business and the
industry generally are subject to seasonality, with consumer purchases typically taking place
primarily in the last three months of the calendar year, and following specific release dates for
popular titles at other times during the year.
33. Cinram manufactures products on orders from its customers, generally pursuant to
multi-year contracts. Cinram does not bear the risk of unsold products as customers cannot return
I any previously purchased inventory& with the exception of defective products. Cinram does not
have title to the products it distributes. Cinram's major contracts are, to a large extent, exclusive
for particular territories, and many of Cinram's manufacturing agreements contain periodic
market price tests that may require Cinram to lower its selling prices or amend other contract
terms. The products Cinram manufactures generally experience price declines on an annual
basis, with declines historically being steeper in the early stages of the products'ife cycles.
34. Cinram has recently taken steps to streamline its physical infrastructure and
operations to actively manage its cost structure to reflect changing industry dynamics. By
streamlining its physical footprint, Cinram's ability to continue providing seamless service to
customers, expand services to those customers and create a platform for growth in other
distribution-centric businesses has increased significantly. Cinram meanwhile maintains
significant production capacity and operational flexibility to meet potential increased demand, -- 240 -13- 28
35. While many of Cinram's facilities were acquired as part of strategic acquisitions,
a number of key sites were specifically developed by Cinram. Sites such as the Nashville
distribution center and the Huntsville plant were selected due to their proximity to major traffic
arteries and the ability to reach a significant portion of the U.S. market within a short trucking
distance. Other sites, such as the Texas wireless distribution and repair center, were established
to take advantage of favourable local tax incentive programs and proximity to key customers,
(ii) Business Segments
36. Cinram operates through three business segments: Pre-recorded Multimedia
Products, Video Game and Other.
(a) Pre-recorded Multimedia Products
37. Cinram's Pre-recorded Multimedia Products segment consists of the replication,
packaging and distribution of DVDs, Blu-ray discs and CDs, including new releases and
catalogue titles, for the entertainment divisions of motion picture studios and music labels.
38. Replication customers provide Cinram with a master in digital format, label
design, and in some cases, graphics and promotional materials. Cinram assumes responsibility
for all manufacturing and packaging operations, and delivers/distributes finished product directly
to retailers or distributors on behalf of its customers.
39. Revenue from the Pre-recorded Multimedia Products segment was $693.4 million
in 2011, compared to $ 1,002.2 million in 2010, as Cinram experienced declines in standard DVD
and CD unit sales and related distribution revenue during 2011. The Pre-recorded Multimedia 29 - 14-
Products segment accounted for 86% of Cinram's 2011 consolidated revenue, down from 90% in
2010.
(i) DVDs
40. Cinram's major customers in North America and Europe are major motion picture
studios. Cinram enters into agreements in the ordinary course of business with major film studio
customers, which deal generally with pricing, delivery, order size, confidentiality and copyright
protection.
41. The DUD market in North America and Europe includes a number of significant
players with whom Cinram competes. In addition, a number of large multimedia conglomerates
with music and video content subsidiaries manufacture DVDs and other multimedia in-house
through captive subsidiaries. Such captive subsidiaries also provide signifi'cant competition for
Cinram.
At the end of 2011, Cinram had the capacity to manufacture approximately 1.9
billion DVDs per year, which allowed Cinram to service most of its customers'easonal peaks in
demand and to minimize offload. According to FutureSource Consulting, an industry expert,
Cinram was one of the top three DUD manufacturers in each of North America and Europe in
2011.
43. In 2011, sales of standard DVDs continued to be the dominant source and the
main driver of revenue for Cinram, DVD revenue (including revenue from related distribution
services) accounted for 67% of Cinram's consolidated revenue in 2011, compared with 75% in
2010 and 77% in 2009. Cinram replicated 575 million DVDs in 2011, a decrease of 38% from —242 -15- 30
933 million in 2010, and, as a result, DVD revenue decreased to $532.6 million in 2011 &om
$835.4 million in 2010 and $1,111.8million in 2009. The decrease in DVD replication, and by
consequence revenue, was primarily the result of the loss a major customer contract (further
discussed below), which terminated on July 31,2010.
(ii) Btu-ray
44 Blu-ray is the format of choice for high-capacity pre-recorded media. Blu-ray
discs can hold up to 25 gigabytes of data or high-definition video on a single layer disc and up to
50 gigabytes on a dual-layer disc. Blu-ray disc production requires capital investment as existing
DVD equipment cannot be retrofitted to manufacture these discs. FutureSource estimates that
unit sales of Blu-ray discs will continue to increase globally at a compound annual growth rate of
approximately 21% per annum for the four years commencing January 2012 while unit sales of
standard DVD discs will decline by approximately 25% per annum for the foreseeable future,
consistent with past experience with the introduction of new pre-recorded media formats. Cinram
has continued to increase its manufacturing capacity for Blu-ray in both North America and
Europe.
45. Blu-ray replication revenue increased to $40.5 million in 2011, compared to $36.1
million in 2010 and $22.5 million in 2009, as consumers continue to migrate towards Blu-ray
discs. While Blu-ray unit shipments increased by 36%, this was partially offset by declining
average selling prices for this format. -16- 243
(iii) CDs
46. Cinram's principal customers in the CD segment are major music labels and publishers in North America,and Europe. Cinram enters into agreements in the ordinary course of business with major music customers, which deal generally with pricing, delivery, order size, confidentiality and copyright protection.
47. Cinram is one of the three largest global CD manufacturers. CD revenue
(including revenue from related distribution services) accounted for 15% of Cinram's consolidated revenue in 2011, up from 12% in 2010 and 11%in 2009.
Even though CD revenue has increased as a percentage of Cinram's consolidated revenue, actual CD production and revenue have declined. In 2011, Cinram's North American and European CD production declined by S% and 6%, respectively. CD revenue decreased to
$ 120.3 million in 2011, compared to $130.7million in 2010 and $161.4million in 2009. The 8% decline in revenue was consistent with industry declines for pre-recorded physical music media and slightly ahead of expectations given the resurgence of physical CD sales primarily driven by attractive consumer pricing for this format at the retail level.
(iv) Distribution
Distribution and fulfillment services continue to be a major factor in Cinram's ability to attract customers. Cinram provides complete manufacturing to retail distribution solutions that allow Cinram's studio and music customers to focus their efforts on their core competencies in creating content. Cinram's capital investments in distribution services over the past few years have allowed Cinram to provide its customers with increased frequency of -- 244 -17-
shipments, more customized order sizes and the ability to handle more stock-keeping units.
However, given the loss of the business from a major customer during 2010, revenue from
distribution services, primarily associated with DVDs, decreased to $210.1 million in 2011,
compared to $259.0 million in 2010.
{b) Video Game
50. The Video Game segment distributes packaged software for console games and
computers, and related peripherals in the gaming marketplace. In addition, Cinram Games~
manages on behalf of its clients third party logistics, virtual warehousing services, direct channel
sales, merchandising, transportation management and retail product lifecycle management
services. The peak processing period i's from mid-August through early January, with November
as the focal point of activity. The customer base comprises video game publishers, content
providers, studios, major retail chains and distributors and includes many of the industry's
leaders.
51. Revenue from the Video Game segment was $44.9 million in 2011, compared to
$59.0 million in 2010 as a result of reduced consumer spending combined with the loss of certain
video game customers.
{c) Other
52. Revenue from the Other business segment, which includes revenue from logistics
services provided through Cinram Wireless, vendor managed inventory revenues associated with
Cinram Retail, and revenues from newly acquired One K, increased to $62.6 million in 2011
from $47.7 million in 2010. The increase was primarily related to 11 months of revenue from -18-
One K during 2011 as the acquisition was completed on January 31, 2011. Revenue from the
Other business segment also includes activities such as authoring and other pre-production services, and the sale of components and stampers. Revenue from the Other business segment represented 8% of consolidated revenue in 2011,up from 5% in 2010.
(iii) Customers
53. Cinram's customers include motion picture studios, music labels, video game publishers, computer software companies, telecommunication companies and retailers around the world. Cinram has multi-year agreements with many of its customers for the provision of replication, distribution, and other services, Many of these customer services agreements contain provisions limiting Cinram's ability to assign the agreement or undergo a change of control event,
54 Due to Cinram's high customer concentration, Cinram depends on its
customers'bility
to capture and maintain their market share of consumer home entertainment spending. In
2011, Cinram's three largest customers in the Pre-recorded Multimedia Products segment accounted for approximately 38%, 23% and 12% of consolidated revenue respectively, a total of
73% of Cinram's total Pre-Recorded Multimedia Product revenue. In 2010, Cinram's three largest customers in the Pre-recorded Multimedia Products segment accounted for 31%,24% and
16% of consolidated revenue respectively, or 71% of Cinram's total Pre-Recorded Multimedia
Product revenue.
55. On June 22, 2012, based on the potential CCAA filing of Cinram, one of
Cinram,'s custoiners provided a termination notice with respect to its replication and distribution services agreements with Cinram, but has advised Cinram that it fully intends to continue to —246 -19-
operate and use Cinram on the same basis and terms of its contractual arrangements with
Cinram.
(iv) Offices and Facilities
56. Cinram operates facilities in North America and Europe that span nearly 9.0
million square feet. Cinram currently has the capacity to manufacture approximately 108 million
Blu-ray discs, 1.9billion DVDs and about 459 million CDs per year to service seasonal peaks in
demand.
57. Cinram operates out of 33 facilities in Canada, the United States and Europe, 11
of which are owned and 22 of which are leased. Of the 33 facilities, 9 are used primarily for the
provision of replication services, 9 are used primarily to provide distribution services, one is used
as both a replication and distribution center, five are warehouse facilities;,one is a printing
facility, and the remainder are used as offices. A list of facilities owned and leased by Cinram
and their primary use is attached hereto as Exhibit "B".
(v) Employees
58. As of December 31, 2011, Cinram employed approximately 8,300 people
worldwide including contract and agency workers.
(a) Emplovees bv Region
(i) Canada
59. CII employs approximately 621 individuals, including approximately 128 salaried
employees and 493 hourly employees, comprised of employees who provide senior management, 35 -20-
accounting, financial reporting, information technology and other corporate services and
employees who are employed in Cinram's Canadian-based distribution business or replication
business.
60. CII supplements its workforce with temporary employees from third-party
temporary staffing agencies. For the month ending March 31, 2012, CII used approximately 124
temporary agency employees. The number of agency employees used by CII almost triples
during Cinram's busy season in the fourth quarter.
(ii) United States
61. Cinram's U.S. enfities employ approximately 2,447 individuals, including
approximately 302 salaried employees and 2,145 hourly employees. These employees all
provide management or labour services related to the replication, packaging;-distribution, sales,
and customer service aspects of the U.S. based Cinram Business. In addition, the U.S. entities
regularly employ approximately 76 independent contractors who are mostly engaged in
computer programming activities carried out in the ordinary course of One K's business, and
approximately 1,422 temporary contract workers performing services such as disc replication,
product packaging, information technology, security and janitorial work.
(b) Collective Agreements
62. Cinram does not have any active unions or collective agreements in place in
North America. —248 -21- 36
{c) Pension Plans
(i) Canada
63. Cinram does not maintain any pension plans for Canadian employees. CII offers a
group RRSP plan which allows employees to contribute a portion of their payroll on a pre-tax
basis to the plan. CII does not match employee contributions,
(ii) United States
64. Cinram's U.S. entities maintain an employee savings plan for all eligible
employees (the "Employee Savings Plan" ). The Employee Savings Plan is tax-qualified within
the meaning of, and administered irf accordance with, the requirements of section 401(k) and
other applicable sections of the United States Internal Revenue Code. Approximately 681
employees currently participate in the Employee Savings Plan, with a total of approximately
$206,583 withheld each month from employees'aychecks for employee contributions.
65. For employees of One K only, the Employee Savings Plan also includes an
employer matching component, pursuant to which One K matches approximately 30% of each
employee's 401(k) contributions, up to an amount equal to 6% of that employee's salary (the
"Employer 401(k) Contributions" ). One K pays an aggregate of approximately $5,000 per
month in Employer 401(k) Contributions.
66. In addition, certain Cinram employees in the United States participate in the
Cinram Music Union Pension Plan ("Music Union Plan" ). CUSH assumed sponsorship of the
Music Union Plan in connection with Cinram's acquisition of the entities now known as IHC and
Cinram Manufacturing from AOL Time Warner Inc. in July, 2003. - 22-
Pension benefits under the Music Union Plan are based on formulas that reflect the employee's years of service multiplied by a specified dollar amount negotiated in collective bargaining. At December 31, 2011, Cinram had a net $1.9 million unfunded defined benefit pension obligation in the United States representing the expected contributions to its defined benefit pension plan.
(d) Other Employee Benefit Plans
(i) Canada
68. CII provides medical and dental benefits and insurance coverage through
Manulife Financial ("Manulife") to,the Canadian employees. CII incurs medical and dental costs associated with employees that participate in the Manulife health care benefit plans, a 50% portion of the Life Insurance premium expense associated with Life Insuran'ce plans offered by
Manulife, and a 50% portion of the Accidental Death and Dismemberment ("A98r9") premium expense associated with the AD&D policies offered by Manulife.
(ii) United States
69. In addition to the Employee Savings Plan and Music Union Plan described above, benefits enjoyed by Cinram's U.S. based employees include:
a. medical insurance provided through a plan administered by Blue Cross and Blue Shield of Alabama ("BCBS"),covering approximately 4,558 U.S. based employees and their dependents;
b. dental insurance provided through BCBS (for Huntsville, Alabama based employees only) or Metropolitan Life Insurance Company for reasonable and customary charges up to an individual maximum benefit of $2,000 per year, covering approximately 4,421 employees and their dependents; -- 250 -23- 38
c. vision insurance provided through UnitedHealthcare Vision, covering approximately 4,578 employees and their dependents;
d. prescription drug coverage provided through Medco Health Solutions, Inc.;
e. an Employee Assistance Program provided by Liberty Mutual Insurance Company that offers short-term professional counselling to U.S, based employees and their family members who are experiencing problems that may affect their general well-being and job performance;
f. optional pre-tax contribution of employee compensation to healthcare flexible spending accounts;
g, term life insurance equal to two times annual base pay; and
h. optional long term disability insurance and supplemental life insurance availability.
(e) Kev Emplovee Retention Program
70, Cinram has put in place a key employee retention program for certain eligible
employees and eligible officers, which is described in detail in Section III(G) below.
(C) Corporate Structure and Financial Position of the Cinram Group
71. As described above, in May 2006, CII converted from a corporate structure to an
income trust structure through a plan of arrangement that was approved by shareholders on April
28, 2006. As a result of the recapitalization, shareholders exchanged their shares of CII for units
of Cinram Fund (or in the case of electing shareholders, into units of the Cinram LP) on a one-
for-one basis. Cinram Fund, the other Fund Entities and CII are Canadian entities and Cinram
Fund is the direct or indirect parent and sole shareholder of all of the subsidiaries in Cinram's
corporate structure.
72. Cinram's financial reporting is done on a consolidated basis. The following
financial statements are being provided to this Honourable Court in support of this Affidavit: 39 -24-
(a) Cinram's audited consolidated financial statements as at December 31, 2011,
attached hereto as Exhibit "C*', and
(b) Cinram's unaudited consolidated financial statements as at March 31, 2012,
attached hereto as Exhibit "D".
73. Based on Cinram's audited consolidated financial statements dated December 31,
2011, the Cinram Group's assets had a book value of approximately $452.7 million, Of this
asset value, approximately $274.8~11ion consists of current assets while the remaining $177.9
million is non-current assets. The current assets include cash totalling approximately $70.1
million, accounts receivable of approximately $ 167.5 million and inventory of approximately
$24.2 million.
74. As at December 31, 2011, the Cinram Group's liabili6es amounted to
approximately $527.8 million, including approximately $496.1 million of current liabilities and
approximately $31.7 million of non-current liabilities. Of the total liabilities, approximately
$ 148.8 million consisted of accounts payable, while the current portion of the long-term debt was
approximately $232.5 million.
75. The Cinram Group's principal source of long-term debt is the senior secured
credit facilities provided by the Lenders under the First Lien Credit Agreement and the Second
Lien Credit Agreement. The senior secured credit facilities are guaranteed by certain companies
within the Cinrain Group, including all of the CCAA Parties (with the exception of the Fund
Entities), and are secured by substantially all of the assets of the Borrowers and Guarantors {with
the exaeption of the Cinram Holdings GmbH and Cinram GmbH whose guarantees are limited as
a result of German corporate law, as further discussed below). As at March 31, 2012, members 252 -25-
of the Cinram Group were indebted in the aggregate principal amount of approximately $252
million under the First Lien Credit Agreement (plus approximately $12 million in letter of credit
exposure) and in the aggregate principal amount of approximately $12 million under the Second
Lien Credit Agreement as follows:
a) with respect to the First Lien Credit Agreement:
(i) CII was indebted as Borrower in the aggregate principal amount of approximately $92 million under the term loan facility;
(ii) Cinram, Inc, was indebted as Borrower in the aggregate principal amount of approximately $ 141 million under the term loan facility;
(iii)CUSH was inde5ted as Borrower in the aggregate principal amount of approximately $19 million under the revolving credit facilities;
(iv)there was approximately $1,3 million of letter of credit exposure relating to Cinram, Inc.;
(v) there was approximately $1.2 million of letter of credit exposure relating to
Cinram Distribution; and
(vi)there was approximately $9,5 million of letter of credit exposure relating to
Cinram's U.S. operating entities in connection with certain employee
obligations; and
b) with respect to the Second Lien Credit Agreement:
(i) CUSH was indebted as Borrower in the aggregate principal amount of
approximately $ 12 million. -26-
76. There are three main facilities under the First Lien Credit Agreement: (1) a term loan facility provided by certain lenders; and (2) two revolving credit facilities provided by certain lenders (which are not necessarily the same lenders that provided the term loan facility).
The revolving credit facilities have an aggregate commitment of $35 million. There is one $14 million revolving credit facility which is utilized as at March 31, 2012 in connection with outstanding letters of credit in the amounts noted above, with the remaining $2 million drawn down by CUSH. The second revolving credit facility of $21 million is a first-out revolving credit facility that has a priority~bove all other security and loans, and can only be utilized after the $ 14 million revolving credit facility is fully drawn. As at March 31, 2012, approximately $17 million of the first-out revolving credit facility has been utilized.
77. Certain of the Applicants also have letter of credit exposure not relating to the
Credit Agreements that are secured by cash collateral, in particular as at March 31, 2012;
a) there was approximately $200,000 of letter of credit exposure relating to
One K with respect to which Community Bank is the issuer; and
b) there was approximately $575,000 of letter of credit exposure relating to
Cinram Manufacturing with respect to which PNC is the issuer.
78. As further described in this Affidavit (including in the discussion on the cash management system and payment for shared services), the Cinram Group also has intercompany amounts owing among many of the Cinram entities. Principal assets and liabilities on an entity basis, excluding intercompany investments, intercompany receivables and intercompany paya/les, are described below with respect to the CCAA Parties. These assets and liabilities are —254 -27-
based on unaudited balance sheets as at March 31, 2012, copies of which with respect to the
CCAA Parties are attached hereto as Exhibit "E".
(i) Canadian Applicants or CCAA Party
79. Cinram Fund, as the ultimate parent of the Cinram Group, is an Applicant in these
proceedings. All of the Canadian entities that are CCAA Parties in these proceedings, other than
the Fund Entities, are Borrowers and/or Guarantors under the Credit Agreements.
(i) cinram Fund
80. Cinram Fund is an unincorporated, open-ended limited purpose trust, established
under the laws of the Province of eqtario by Declaration of Trust dated March 21, 2006, as
amended and restated on May 5, 2006. Cinram Fund has 439.0 million units outstanding. Its
units are listed on the TSX under the symbol CRW.UN. On June 15, 2012, tFie-TSX announced
that it had determined to delist the units of Cinram Fund at the close of market on July 16, 2012
for failure to meet the continued listing requirements of the TSX.
81. Cinram Fund, together with Cinram GP, CII Trust, Cinram LP and Cinram ULC,
comprises the entities within the income fund structure. All of the entities within the income
fund structure are Applicants, or in the case of Cinram LP, a CCAA Party, in these proceedings.
Cinram Fund's assets consist primarily of intercompany receivables and
intercompany investments,
83. As at March 31, 2012, Cinram Fund's primary liabilities were certain
intercbmpany payables. -28-
(ii) Cinram GP
84. Cinram GP is an Ontario company and a wholly-owned subsidiary of Cinram
Fund. It is a holding company that does not carry on business operations.
85. Cinram GP directly owns 0.01%of the units of Cinram LP and has no materials assets or liabilities.
(iii) CII Trust
86. CII Trust is an unincorporated, open-ended limited purpose trust, established under the laws of the Province of Ontario by Declaration of Trust dated March 21, 2006, and forms part of Cinram's income fun'tructure.
87. CII Trust directly owns 99.4% of the units of Cinram LP;, which ownership interest constitutes its principal asset.
SS. CII Trust's intercompany payables constitute its principal liabilities.
(iv) Cinram LP
Cinram LP is limited partnership formed under the laws of Manitoba pursuant to a partnership agreement between Cinram GP and CII Trust, as amended and restated on May 5,
2006. Cinram LP is not an Applicant in these proceedings and the Applicants are requesting to have the protections under the Initial Order extended to Cinram LP as a CCAA Party.
90. Cinram LP directly owns Cinram ULC, which ownership interest constitutes its principal asset, and has no material liabilities. -- 256 - 29-
(v) Cinram ULC
91. Cinrain ULC is a Nova Scotia unlimited liability company. It is a holding
company that does not carry on business operations.
92. Cinram ULC directly owns CII, which ownership interest constitutes its principal
asset.
93. Cinram ULC is a Guarantor under the Credit Agreements, which guarantee
obligations constitute its principal liabilities.
(vi) CII
94 CII, a corporation organized under the Canada Business Corporations Act, RSC
1985, c C-44 ("CBCA"), is a wholly-owned subsidiary of Cinram ULC. It provides replication
and distribution services to several major customers in Canada from its owned replication facility
and its leased distribution facilities located in Toronto. CII also provides many shared services
to the Cinram Group and operates and monitors the cash management system used by Cinram's
North American entities.
95. The registered and principal office of CII, and head office of the Cinram Group, is
located at 2255 Markham Road, Toronto, Ontario.
CII directly owns CUSH, 1362806, two other non-operating European entities and
a 99,95% interest in Cooperatie Cinram Netherlands UA ("Cinram Netherlands" ), a
Netherlands company which is the holding company for the European structure. In addition to
its intercompany receivables and intercompany investments, as at March 31, 2012, CII's assets 45 -30-
consisted primarily of approximately $15,700,366 of accounts receivable, $6,407,646 of plant,
property and equipment, $2,726,242 of cash and cash equivalents, $1,880,375 of inventory and
$886,057 of prepaid expenses.
97. CII is a Borrower and Guarantor under the Credit Agreements. In addition to its
obligations under the Credit Agreements and its intercompany payables, as at March 31, 2012,
CII's other liabilities consisted primarily of approximately $10,648,156 of accrued liabilities,
$8,876,914 of income taxes payable, $3,894,926 of current employee benefits, $2,620,475 of
accounts payable and $ 1,738,994of current provisions.
(vii) 1362806
98. 1362806 is an Ontario company and a wholly-owned subsidiary of CII. It is a
holding company that does not carry on business operations.
1362806 holds a 0.05% interest in Cinram Netherlands. 1362806's intercompany
investments constitute its principal assets.
100.. 1362806 is a Guarantor under the Credit Agreements, which guarantee
obligations constitute its principal liabilities.
(ii) U.S. Applicants
101. All of the U.S. entities that are Applicants in these proceedings are Borrowers
and/or Guarantors under the Credit Agreements. 258 -31- 46
(i) CUSH
102. CUSH is a corporation organized under the laws of the State of Delaware and a
wholly-owned subsidiary of CII. CUSH is a holding company that does not carry on business
operations.
103. CUSH directly owns all of the U.S. entities, which ownership interests and
intercompany receivables constitute its principal assets.
104. CUSH is a Borrower and Guarantor under the Credit Agreements. CUSH's
liabilities consist primarily of its obligations under the Credit Agreements and intercompany
payables.
(ii) Cinram, Inc.
105. Cinram, Inc. is a corporation organized under the laws of the State of Delaware
and is a wholly-owned subsidiary of CUSH. It is an operating company providing, inter alia,
DVD and Blu-ray replication and distribution services to several major customers in the U.S. out
of its owned replication and distribution facility and leased warehouse facilities in Huntsville,
Alabama.
106. In addition to its intercompany receivables, as at March 31, 2012, Cinram, Inc.'s
assets consisted primarily of approximately $41,273,065 of plant, property and equipment,
$21,474,400 of accounts receivable, $5,815,449 of cash and cash equivalents, and $6,641,430 of
inventory. - 32-
107. Cinram, Inc. is a Borrower and Guarantor under the Credit Agreements. In addition to its obligations under the Credit Agreements and its intercompany payables, as at
March 31, 2012, Cinram, Inc.'s liabilities consisted primarily of approximately $18,480,466 of accrued liabilities, $4,971,030 of accounts payable, $4,483,201 of current employee benefits,
$4,027,346 of current provisions and $6,119,877of financing leases.
(iii) IHC
108. IHC, formerly Ivy Hill Corporation, is a corporation organized under the laws of the State of Delaware and is a wholly-owned subsidiary of CUSH. In April 2009, substantially all of the assets of Ivy Hill Corporation were sold to Multi Packaging Solutions, Inc. ("MPS").
i IHC continues to own a printing facility in Louisville, Kentucky but has no active business operations.
109. In addition to its intercompany receivables, as at March 31, 2012, IHC's assets consisted primarily of approximately $2,593,313 of investment property and $267,276 of prepaid expenses.
110. IHC is a Guarantor under the Credit Agreements. In addition to its guarantee obligations and its intercompany payables, as at March 31, 2012, IHC's liabilities consisted primarily of approximately $1,424,387 of current employee benefits and $2,937,256 of current provisions.
(iv) Cinrarn Manufacturing
Cinram Manufacturing is a limited liability company existing under the laws of the State of Delaware and is a wholly-owned subsidiary of CUSH. It is an operating company —260 -33- 48
providing replication services in the U.S. from its owned replication facility in Olyphant,
Pennsylvania.
112. In addition to its intercompany receivables, as at March 31, 2012, Cinram
Manufacturing's assets consisted primarily of approximately $37,292,286 of plant, property and
equipment, $9,997,515 of accounts receivable, $2,881,009 of inventory, $1,429,196 of prepaid
expenses and $991,221 of cash and cash equivalents.
113. Cinram Manufacturing is a Guarantor under the Credit Agreements. In addition
to its guarantee obligations and its intercompany payables, as at March 31, 2012, Cinram
Manufacturing's liabilities consisted primarily of approximately $5,250,856 of accrued
liabilities, $4,369,702 of current employee benefits, $2,095,272 of accounts payable and
$1,722,210 of current provisions.
(v) Cinrarn Distribution
114. Cinram Distribution is a limited liability coinpany existing under the laws of the
State of Delaware and is a wholly-owned subsidiary of CUSH. It is an operating company
providing distribution services in the U.S. from its leased distribution facilities in Aurora, Illinois
(terminating July 31, 2012) and Laverne, Tennessee. Cinram Distribution also has leased office
facilities in Auburn, Washington, Carmel, Indiana, San Ramon, California, Greenwood, Indiana
and Batavia, Illinois.
115. In addition to its intercompany receivables, as at March 31, 2012, Cinram
Distribution's assets consisted primarily of approximately $6,845,221 of accounts receivable and
$2,695,536 of cask and cash equivalents. - 34-
116. Cinram Distribution is a Guarantor under the Credit Agreements. In addition to
its guarantee obligations and its intercompany payables, as at March 31, 2012, Cinram
Distribution's liabilities consisted primarily of approximately $2„953,308 of current employee benefits, $ 1,974,662 of accounts payable and $1,380,778 of accrued liabilities.
(vi) Cinram Wireless
117. Cinram %'ireless is a limited liability company existing under the laws of the
State of Delaware and is a wholly-owned subsidiary of CUSH. It provides repair, programming,
packaging and related logistics services for mobile devices in the United States solely for
Motorola from its leased facility in Fort Worth, Texas.
118. In addition to its intercompany receivables, as at March 31, 2012, Cinram
Wireless'ssets consisted primarily of approximately $10,671,024 of accounts receivable,
$6,709,233 of cash and cash equivalents and $1,889,608 of plant, property and equipment.
119. Cinram Wireless is a Guarantor under the Credit Agreements. In addition to its
guarantee obligations and its intercompany payables, as at March 31, 2012, Cinram
Wireless'otal
liabilities consisted primarily of approximately $1,610,632of current employee benefits and
$1,158,930of accrued liabilities.
(vii) Cinram Retail
Cinram Retail, formerly Vision Information Logistics LLC, is a limited liability
company existing under the laws of the State of Delaware and is a wholly-owned subsidiary of
CUSH. It offers its logistics services and merchandising solutions to studios and retailers in the
United States from its leased office facilities in Troy, Michigan. —262 -35- 50
121. In addition to its intercompany receivables, as at March 31, 2012, Cinram Retail's
assets consisted primarily of approximately $733,750 of investment property, which investment
property was sold in May 2012 for net proceeds of approximately $750,000.
122. Cinrarn Retail is a Guarantor under the Credit Agreements. Cinram Retail's
guarantee obligations and intercompany payables constitute its primary liabilities.
(viii) One K
123. One K is a limited liability company existing under the laws of the State of
California and is a wholly-owned subsidiary of CUSH. It is a digital media firm with leased
office facilities in Burbank, California and a sub-office in Olyphant, Pennsylvania providing
creative and technical services and specializing in building enhanced consumer experiences for
movies, TV shows, music, books and games.
124. As at March 31, 2012, One K's assets consisted primarily of approximately
$1,856,942 of accounts receivables, $2,145,408 of work in process, $1,141,809 of intangible
assets and $836,859 of plant, property and equipment.
125. One K is a Guarantor under the Credit Agreements. In addition to its guarantee
obligations and its intercompany payables, as at March 31, 2012, One K's liabilities consisted
primarily of approximately $498,514 of current employee benefits and $482,064 of accounts
payable. - 36-
(iii) European Entities
126. The European entities shown on the Cinram corporate chart are not Applicants in these proceedings. Certain of the European entities are Guarantors under the Credit Agreements, namely:
a) Cinram Netherlands, a holding company organized under the laws of the
Netherlands of which 99.95% is held by CII and 0.0S% by 1362806 that
does not carry on any business operations;
b) Cinram Europe B.V.,a holding company organized under the laws of the
Netherlands Pat is a wholly-owned subsidiary of Cinram Netherlands
which carries on certain administrative functions for Cinram's European
structure;
c) Cinram Operations UK Limited, a company organized under the laws of
the United Kingdom providing replication services &om a leased facility
in Ipswich, England;
d) Cinram Holdings GmbH, a holding company organized under the laws of
Germany that does not carry on business operations;
e) Cinram GmbH, a company organized under the laws of Germany
providing replication, distribution and printing services from its owned
and leased facilities in Alsdorf, Germany; and 264 -37- 52
f) Cinrarn International (Hungary) Kft, a company organized under the laws
of Hungary that is a wholly-owned subsidiary of CII that does not carry on
business operations and that is in the process of a voluntary corporate
dissolution under the control of an administrator in Budapest, Hungary.
127. While Cinram Holdings GmbH and Cinram GmbH are both Guarantors under the
Credit Agreement, the guarantees provided by them are limited as a result of German corporate
law, which is embodied in the German limitation language in the Credit Agreements.
128. The remaining European entities that form part of the Cinram Group are not
Borrowers or Guarantors under the Credit Agreements.
129. The European entities mainly operate in the United Kingdom through Cinram
Operations UK Limited and Cinram Logistics UK Limited; in Germany through Cinram GmbH;
and in France through Cinram Optical Discs and Cinram Logistics France SA. At the top of the
Cinram Group's European structure are holding companies in the Netherlands.
130. European operations in the UK, Germany and France collectively employ
approximately 1,900 permanent employees, certain of which are party to collective agreements
and many of which are entitled to receive pension and/or other retirement benefits from the
relevant European entity.
131. On May 29, 2012, one of the French operating entities, Cinram Optical Discs, that
provides replication services through a facility in Louviers, France owned by SCI Cinram
France, commenced insolvency proceedings in France. Cinram Optical Discs'VD
manufacturing operation has been impacted by a steady decline in volumes in recent years. It is -38- not intended that any insolvency proceedings will be commenced with respect to any of
Cinram's other European entities.
(0) Credit Agreements
132. The Original Credit Agreement provided a term loan and revolving credit facilities with a maturity date of May 5, 2011. Each of the borrowers and guarantors under the
Original Credit Agreement guaranteed the obligations of each other thereunder. As security for the repayment of the amounts owed under the Original Credit Agreement, each of the borrowers and guarantors granted security over aH or substantially all of its respective assets.
(i) Refinancing and Recapitalization
133. On April 11, 2011, Cinram completed a refinancing and recapitalization transaction (the "Refinancing and Recapitalization").
134. The key elements of the changes to Cinram's capital structure included: (1) an amendment and extension of the Original Credit Agreement to December 31, 2013 pursuant to the First Lien Credit Agreement; (2) an increase to the interest rate on the term loan (the "Term
Loan") under the First Lien Credit Agreement; (3) a reduction in the amount of the existing
Term Loan by $ 120 million; and (4) a reduction of commitments under the revolving facility from $100 million to $35 million.
135. The reduction of the Term Loan as at April 11, 2011 was effected through (1) a cash pay-down at closing of the Refinancing and Recapitalization in the principal amount of $30 million and (2) an exchange of outstanding first-lien term debt in the amount of $90 million for —266 -39-
$90 million second-lien secured debt (the "Second Lien Debt") mandatorily exchangeable into
equity of Cinram Fund on December 31, 2011 pursuant to the Second Lien Credit Agreement.
136. Lenders also received cash and units in Cinram Fund as consideration for the
Refinancing and Recapitalization.
{ii) Mandatory Exchange of Second Lien Debt
137. The Second Lien Debt was not repaid prior to the December 31, 2011 exchange
date. As a result, pursuant to the terms of the Second Lien Credit Agreement, on January 3,
2012, Cinram Fund completed the issuance of 373,172,682 Cinram Fund units in exchange for
the $90 million original principal arqount of the Second Lien Debt and $308,000 of accrued
interest which certain of the holders of the Second Lien Debt elected to exchange. Following the
exchange, approximately $11.6million of accrued interest owing to those holders who elected to
retain their portion of accrued interest paid in kind remained outstanding under the Second Lien
Credit Agreement with a maturity date of December 31,2013.
(iii) Amendments to the Credit Agreements
(a) Aui ust 2011 Amendment
138. In August 2011, Cinram sought amendments to the Credit Agreements following
disappointing results for the first half of 2011 due primarily to a decline in customer order
volumes.
139. On August 12, 2011, Cinram completed amendments to the First Lien Credit
Agreement and the Second Lien Credit Agreement (the "August 2011 Amendment" ), Key 55 -40- 267
changes resulting from the amendments included: (1) changes to certain financial covenants
under the Credit Agreements; (2) interest rate increases on both the Term Loan and the Second
Lien Debt; (3) the addition of certain restrictions on permitted expenditures for certain items; and
(4) the addition of a requirement for lender approval of a multi-year financial plan by no later
than March 1S, 2012 (the "Business Plan" ). Also, as described below, pursuant to the August
2011 Amendment, Cinram engaged Moelis as investment banker to assist Cinram in a review of
Cinram's strategic alternatives.
(b) Waivers to Credit Agreements
140. Continued decline in customer volumes for the fourth quarter of 2011 resulted in
Cinram seeking waivers to certain covenants in the Credit Agreements, including covenants
pertaining to the leverage ratio and interest coverage ratio. A series of waivers was extended
from December 2011 to June 30, 2012, relating to certain financial covenants and, commencing
in March 2012, relating to timing for lender approval of the Business Plan and certain other
financial reporting requirements. Upon expiry of the waivers, the Lenders will have the ability to
demand immediate repayment of the amounts outstanding under the Credit Agreements.
(E) The Need for Relief
(i) Economic Challenges
141. As described above, Cinram operates in an industry where there is a high degree
of customer concentration and where production levels and cash flows in any period are
materially affected by the timing and commercial success of customer product releases. —268 -41- 56
Although Cinram has secured exclusive multi-year contracts with key customers, these come up
for renewal at different times and typically do not include volume commitments,
142. The economic downturn in Cinram's primary markets of North America and
Europe has impacted consumers'iscretionary spending and adversely affected the industry. For
example, according to industry information:
(a) U.S. consumer home entertainment rental and sell-through spending decreased in
2011, led by shrinking rental revenue from retail stores and fewer DVD sales, and
while Blu-ray disc sales increased, total spending on packaged videos fell 13% in
2011 compared to 2010;
(b) the physical CD replication industry is currently relatively fragmented and
continues to experience declines as consumers switch to digital distribution
(although CD sales during 2011 were ahead of expectations given attractive
consumer pricing for this format at the retail level) and consolidation and
rationalization are expected to continue due to decreasing CD demand and excess
capacity in the industry; and
(c) video game consoles, with a typical life cycle of four to six years, have been
experiencing price reductions and falling sales in software and hardware.
143. Following the economic downturn and reduced discretionary spending
experienced industry-wide described above, over the past four years, Cinram has experienced
significant declines in revenue and EBITDA, resulting in part due to customer losses, reductions
in pricing and declining customer order volumes. Annual revenue for fiscal years 2008, 2009, 2010 and 2011 was approximately
$1,714 million, $1,453 million, $1,109 million and $801 million respectively. The 28'/o decline in revenue in 2011 was driven primarily by lower revenue in Cinram's core Pre-recorded
Multimedia Products segment, and to a lesser extent, lower video game revenues. This dechne in revenue was partially offset by a company-wide reduction in labour and overhead costs through facility rationalization and headcount reduction.
145. Cinram's EBITDA has also been declining since 2008 with EBITDA for fiscal years 2008, 2009, 2010 and 2011 being approximately $259 million, $182 million, $ 132 million and $28 million respectively. Cinram's net loss from continuing operations was $87.6 million in
2011,compared to net earnings of$15.7million in 2010.
146. A contributing factor to declining revenues was the loss of a major customer, representing approximately 32% of Cinram's 2009 total consolidated revenues, that exercised its option to terminate its service agreeinents with Cinram, which had a direct impact on its global operations, including North America, Mexico (now closed), UK, France, Germany and Spain.
Another contributing factor is significant pricing pressures exerted by Cinram's major customers. Cinram is engaged in an industry that is highly price competitive where some competitors have greater financial and other resources than Cinram or are lower-cost, offshore replicators. In addition, as a result of defined contractual commitments, absent renegotiation, the average replication prices for DVDs and Blu-ray discs are expected to continue to decline in
coming years. In many instances, renegotiation of terms of Cinram's agreements with its customers has resulted in lower pricing and margins. Cinram expects that future price declines will be less than recent price declines due to the maturation of the cost structure of the format. —270 58
Price negotiations with customers typically occur on an annual basis as a result of market tests or
contract renewals.
148. Declining revenues and EBITDA have made it increasingly difficult for Cinram
to service its significant debt obligations and comply with its financial covenants under the
Credit Agreements.
(ii) Challenges under the Credit Agreements
149. During 2011, Cinram's primary uses of funds included scheduled debt and
interest payments, and transaction costs associated with the Refinancing and Recapitalization.
150. As previously discussed above, although the Refinancing and Recapitalization
reduced Cinram's first lien debt by $120 million and resulted in an extension of the maturity date
to December 2013, continuing declines in revenue and EBITDA left Cinram iri a position where
it could not meet certain financial covenants under its Credit Agreements, Upon expiry of the
waivers to the Credit Agreements, Cinram would be in default of certain covenants under the
Credit Agreeinents and the Lenders would be entitled to accelerate and enforce on the debt, None
of the Borrowers or the Guarantors would be able to pay the full amount owing under the Credit
Agreements should it be become immediately due and payable.
(F) Restructuring Efforts to Date
(i) Consolidation/Cost Reduction
151. As set out in Cinram Fund's 2009 Annual Report, Cinram's strategic agenda
include the reduction of debt, costs and capital expenditures and a focus on core operations. -44-
Since 2009, Cinram has taken several steps in an effort to strengthen its operational and financial position. Cinram has worked to reduce its debt levels by retiring $280 million of debt in 2009 and 2010 and by reducing its debt by an additional $133 million through the mandatory debt repayments and the Recapitalization and Refinancing in 2011. By December 31, 2011, Cinram had reduced its debt balance to approximately $235 million.
152. Cinram has also focused on reducing its cost structure by improving direct costs and fixed overhead efficiencies. Cinram has also reduced its net capital expenditures from $42 million in 2009 to $15 million in 2010. In 2011, Cinram limited its cash capital expenditures„net of capital lease financing, to $ 10 million, primarily allocated to additional Blu-ray capacity.
153. Furthermore, Cinram has increasingly focused on its core business of producing standard DVDs and Blu-ray discs, and on providing related distribution services, with the intention of disposing of non-core assets, including facility rationalization where appropriate. In
April 2009, Cinram sold substantiaHy all of the assets of Ivy Hill Corporation to MPS. In January
2010, Cinram completed the sale of its owned distribution centre in Simi Valley, California. In
June, 2010 Cinram sold its 50% share of a Mexican joint venture, Cinram LatinoAmericana, S.A de C.V.
154. As a result of recent terminations of certain customer contracts and decreased sales volumes under continuing contracts, Cinram has pursued further efforts to consolidate its business to reduce costs and excess capacity.
155. In 2011, Cinram completed the closure of the Indianapolis distribution site, consolidating it with its Nashville facility. Cinram is currently in the process of transitioning its distribution facility in Aurora, Illinois, which provided primarily CD related distribution services -- 272 -45- 60
for a particular customer, to its Nashville facility. This transition process is expected to be
completed on or around June 30, 2012.
156. While Cinrain has made significant consolidation efforts to improve efficiency
and reduce costs in response to its declining revenues, and has focussed its efforts on an
increased presence in the growing Blu-ray market, Cinram has as of yet been unable to offset
revenue declines with sufficient fixed cost reductions.
(ii) Recapitalization Efforts
157. As set out above, Cinram completed the Refinancing and Recapitalization to,
among other things, reduce its debt and extend the maturity date of its credit facilities, in an
effort to provide Cinram with increased liquidity and a more sustainable capital structure.
However, due to continued decline in revenues, additional restructuring efforts.,are required.
158. In this regard, pursuant to the terms of the First Lien Credit Agreement, Cinram
has the option to pay in kind principal and interest amounts due under the agreement in certain
circumstances. On March 28, 2012, Cinram exercised this option in order preserve cash and
improve liquidity levels.
(iii) Strategic Review Process
159. Pursuant to the August 2011 Amendment, in September, 2011, Cinram engaged
Moelis as investment banker to assist Cinram in a comprehensive and thorough review of
strategic alternatives with the goal of maximizing value for Cinram's stakeholders. Moelis
sought to identify a potential transaction such as a sale of the company, strategic combination or -46- new money investment from a strategic or financial investor, while concurrently evaluating a possible stand-alone transaction with Cinram's lenders.
160. As part of this strategic review process, Moelis undertook a comprehensive assessment of the market for the Cinram Business to identify potential parties that might be interested in considering an acquisition or investinent transaction and contacted 59 parties, including 54 financial investors and 5 strategic investors. Approximately 26 parties executed confidentiality agreements. Those that executed confidentiality agreements were provided with a detailed Confidential Information Memorandum and provided access to a data room. Several potential bidders submitted non-binding expressions of interest in January 2012. Cinram, its advisors and Moelis engaged in discussions with such interested parties in order to determine the optimal structure of transaction and value that could be obtained for the benefit of Cinram's stakeholders.
161. During February 2012, Cinram prepared materials further detailing the Cinram
Business and management presented to each of the individual bidders, or a diligence session was provided in lieu of a i1ianagement presentation. Cinram management also provided updated financial projections and answered bidders'dditional due diligence questions.
162, On February 28, 2012, Moelis provided to each potential bidder a Process Letter requesting a detailed proposal (a "Detailed Proposal"} from each bidder by March 12, 2012.
The Detailed Proposal required bidders to outline proposed transaction terms, due diligence and other conditions, and a timetable for the proposed transaction. A more limited number of second round bids were received on or about March 12, 2012 and were reviewed by Moelis, Cinram management and its advisors. —274 -47- 62
163. Moelis and Cinram continued discussions with certain of the second round
bidders each of whom conducted more detailed due diligence, including telephonic and in person
meetings with Cinram management and its advisors, as well as visits to key operating facilities.
Moelis requested receipt of binding indications of interest by April 6, 2012, which binding
proposals were to include specific details, including: (a) value/form of consideration; (b)
transaction structure; (c) assumed/excluded assets and liabilities; (d) timing to close; (e) evidence
of financing; (f) details of any proposed price adjustments; and (g) assumptions of existing
indebtedness.
164. In April, Moelis received an inbound inquiry from a new party expressing interest
in Cinram, who also executed a confidentiality agreement and was provided with access to the
Cinram data room. This was followed shortly with a formal indication of interest.
165. Cinram management, Moelis and Cinram's legal and financial advisors continued
discussions and conducted meetings with interested parties, while also continuing discussions
with Cinram's lenders in connection with pursuing a possible stand-alone transaction.
166. After reviewing and considering all of the submissions in the strategic review
process, Cinram aAer discussion and consultation with Moelis, Cinram's other advisors and the
Lenders'dvisors, determined that the offer submitted in respect of the Proposed Purchaser was
the best offer submitted in the circumstances taking into account such factors as (i) purchase
price; (ii) conditions for closing; (iii) required financing; (iv) structuring of the transaction; (v)
the timeframe within which the transaction could be closed; and (vi) certainty of close. -48-
167. Accordingly, Cinram, with the assistance of Moelis, entered into negotiations with the Proposed Purchaser in respect of the execution of definitive agreements for the sale of the Purchased Assets and Purchased Shares.
168. The strategic review process culminated with the execution of the Asset Purchase
Agreement by CII and the Proposed Purchaser on June 22, 2012 and with the execution of the
Purchase Offer by the Proposed Purchaser on June 22, 2012. It is currently contemplated that
Moelis will continue assisting Cinram with the completion of the Proposed Transaction through these CCAA proceedings.
169. Throughout the strategic review process, Cinram kept key stakeholders, including the Lenders and major 'customers, apprised of its progress. In addition to discussions in
connection with a potential stand-alone transaction, the Lenders engaged in extensive discussions
with Cinram and its advisors from the commencement of the process with respect to a possible
sale or investment transaction and participated in discussions with potential bidders as part of the
process. Cinram and its advisors also partook in discussions with Cinram's major customers and
provided updates as to the developments in the process. Such parties have been supportive of
Cinram's efforts in pursuing a successful restructuring of its business, including through the
Proposed Transaction.
(iv) Proposed Transaction
170. The Proposed Purchaser is a newly formed entity owned by the Najafi Companies
{"Najafi"},an international private investment firm based in Phoenix, Arizona. As referenced on
the firm's website, Najafi makes selective investments up to $ 1 billion in transaction value in
companies with strong management teams across a variety of industries, taking a long-term view —276 -49-
on its investments and focusing its efforts on creating value through growth and superior
performance. Najafi's operating investments include, among others, Direct Brands (including
Columbia House), Innovative Brands, Trend Homes and Snowflake Power.
171. As discussed above, the Proposed Transaction contemplates the Proposed
Purchaser, or one or more of its nominees, acquiring the Purchased Assets pursuant to the Asset
Purchase Agreement (the "Asset Sale Transaction" ) and the Purchased Shares pursuant to the
Purchase Offer (the "Share Sale Transaction" ) for an aggregate purchase price of $82,500,000,
subject to certain adjustments in accordance with the terms of the Purchase Agreement and
Purchase Offer. The Asset Sale Transaction is subject to customary conditions, including receipt
of approval under the Investment Canada Act and other requisite approvals. Completion of the
Share Sale Transaction is also subject to customary conditions, the closing of the Asset Sale
Transaction and completion of workers'ouncil consultation processes in. France, which
processes, I am advised by legal counsel, do not require approval by the applicable
workers'ouncils. The aim is to close the Asset Sale Transaction and the Share Sale Transaction
siinultaneously in August 2012; however, the closing of the Share Sale Transaction may be
extended if necessary to complete certain regulatory consultation matters and subject to the
Purchaser's right to extend the closing to December 17, 2012.
172. In connection with the Proposed Transaction, CII has agreed not to pursue an
Acquisition Proposal (as defined in the Asset Purchase Agreement), subject to the terms and
conditions of the Asset Purchase Agreement, which include the ability to consider an Acquisition
Proposal that is reasonably expected to lead to a Superior Proposal (as defined in the Asset
Purchase Agreement). If CII terminates the Asset Purchase Agreement for the purpose of
entering into a binding written agreement with respect to a Superior Proposal, CII must pay to - 50- the Proposed Purchaser a fee in the amount of $2,250,000, and in certain additional circumstances. The Share Sellers have also agreed not solicit any other transactions with respect
to any shares of Cinram's European entities.
173. Further details with respect to the Proposed Transaction will be set out in the
affidavit filed in support of the Sale Approval Motion.
(v) Support Agreement
174. As discussed above, on June 22, 2012, Cinram Fund, the Borrowers under the
Credit Agreements and lenders forming the Steering Committee (the "Initia) Consenting
Lenders") entered into a Support Agreement pursuant to which the Initial Consenting Lenders
agreed to support the Proposed Transaction to be pursued through these CCAA proceedings (the
"Support Agreement" ). A copy of the Support Agreement is attached as Exhibit "F"hereto.
175. The Proposed Transaction has the support of lenders representing approximately
40% of the loans under the First Lien Credit Agreement. Cinram anticipates further support of
the Proposed Transaction from additional lenders following the public announcement of the
Proposed Transaction.
176. Pursuant to the Support Agreement, lenders under the First Lien Credit
Agreement who execute the Support Agreement or a Consent Agreement {as defined in the
Support Agreement} prior to July 10, 2012 (the "Consent Date"} are entitled to receive consent
consideration (the "Early Consent Consideration" ) equal to 4% of the principal amount of
loans under the First Lien Credit Agreement (excluding any letter of credit exposure or amounts
outstanding under the first-out revolving credit facility) held by such Consenting Lender as of the 278 — -51- 66
Consent Date, payable in cash from the net sale proceeds under the Purchase Agreement
received on closing of the Proposed Transaction upon distribution of such proceeds in the CCAA
proceedings. The Applicants request a Court-ordered charge over the assets and property of the
CCAA Parties that are Borrowers and Guarantors (the "Charged Property" ) as security for the
Early Consent Consideration (the "Consent Consideration Charge" ), subject to the prior
payment in full of all obligations under the first-out revolving credit facility.
177. The Support Agreement terminates automatically if, among other reasons, the
Purchase Agreement is terminated in accordance with the terms thereof, and may be terminated
by the Majority Consenting Lenders (as defined in the Support Agreement) if, among other
reasons, the Asset Sale Transaction hy not closed by September 15, 2012.
III. CCAA PROCEEDINGS
178. CII, Cinram Fund, CII Trust and the companies listed in Schedule "A" are
Applicants within the CCAA proceedings. For reasons discussed in this Affidavit, it is
appropriate for this Honourable Court to exercise its jurisdiction to grant the Initial Order in
respect of CII, Cinram Fund, CII Trust and the companies listed in Schedule "A" and to extend
the protections under the Initial Order to Cinram LP.
(A) The Applicants are Insolvent for the Purposes of the CCAA
179. D'espite its comprehensive efforts to consolidate operations and to restructure or
recapitalize the Cinram Business, Cinram remains unable to satisfy certain covenants under the
Credit Agreements and has been unable to repay or refinance the amounts owing under the 67 - 52-
Credit Agreements or find an out-of-court transaction for the sale of the Cinram Business with
proceeds that equal or exceed the amounts owing under the Credit Agreements,
180. Reduced revenues and EBITDA and increased borrowing costs have significantly
impaired Cinram's ability to service its debt obligations. Although the Cinram Business is
generating positive EBITDA, it will not generate sufficient funds to enable Cinram to comply
with its obligations under the Credit Agreements, There is no reasonable expectation that
Cinram will be able to service its debt load in the short to medium term given forecasted net
revenues and EBITDA for the remainder of fiscal 2012 and for fiscal 2013 and 2014. In light of
the financial circumstances of the Cinram Group, it is not possible to obtain additional financing
that could be utilized to repay the arqounts owing under the Credit Agreements.
181. Additionally, the decline in revenues and EBITDA generated by the Cinram
Business has caused the value of the Cinram Business to decline. As a result, the aggregate
value of Cinram's Property, taken at fair value, is not sufficient to allow for payment of all of the
Applicants'bligations due and accruing due.
182. Cinram has been unable to find an out-of-court solution to its financial
difficulties, and there is no reasonable expectation that the Cinram Group's financial condition
will improve absent these restructuring proceedings. Without a successful restructuring,
indications suggest that the Cinram Group's liquidity and ability to service its cash payment
obligations will deteriorate further with a corresponding erosion of the value of the Cinram
Business.
183. Were the Lenders to accelerate the amounts owing under the Credit Agreements,
the Borrowers and the other Applicants that are Guarantors under the Credit Agreements would —280 -53-
be unable to meet their debt obligations. Cinram Fund would be the ultimate parent of an
insolvent business. The Applicants are therefore insolvent.
(B) Stay of Proceedings under the CCAA
184. The Applicants are concerned that in light of the Applicants'inancial
circumstances, there could be a fast and significant erosion of value to the detriment of all
stakeholders. In particular, the Applicants are concerned about the following risks:
a) the Lenders demanding payment in full for money owing under the Credit
Agreements;
b) potential termination 6f contracts by key suppliers; and
c) potential termination of contracts by customers.
185. Because of the integration of the Cinram Business, the above risks also apply to
the Applicants'ubsidiaries, including Cinram LP. It would be detrimental to the CCAA
Parties'bility to restructure and implement the Proposed Transaction if proceedings were commenced
or rights and remedies were exercised against Cinram LP, a part of the Cinram Group, or if
proceedings were commenced or rights and remedies were exercised against the CCAA
Parties'ubsidiaries that are also party to contracts with one or more of the CCAA Parties (whether as
surety or guarantor or otherwise) (the "Subsidiary Counterparties") by any of the third parties
to such agreements. This would also lead to an erosion of value of the Cinram Business, to the
detriment of all Cinram stakeholders. Accordingly, the Initial Order in the form submitted by the
Applicants contains provisions enjoining the exercise of rights and remedies against the CCAA 69 - 54-
Parties and the Subsidiary Counterparties with respect to claims relating to any agreement
involving the CCAA Parties or the obligations of the CCAA Parties.
186. Having regard to the circumstances, and in an effort to preserve the value of the
Cinram Business, the commencement of the within CCAA proceedings and the granting of a stay
of proceedings relating to the CCAA Parties and the Subsidiary Counterparties in order to permit
the CCAA Parties to restructure their affairs and implement the Proposed Transaction are in the
best interests of the CCAA Parties and their stakeholders.
187. Furthermore, in the circumstances, without a stay of proceedings to enable the
CCAA Parties to restructure and obtain debtor-in-possession financing ("DIP Financing" ), the
CCAA Parties would not be able to service their debt load or meet their debts as they become
due.
{C) The Monitor
188. FTI Consulting Canada Inc. ("FTI")has been retained to, among other things, act
as Monitor in potential CCAA proceedings. FTI has been engaged as Cinram's financial adviso~
since February 2010, initially in North America and its affiliate subsequently in Europe, to,
among other things, assist with liquidity management and reporting (including assisting with the
preparation of cash flow forecasts), the development and implementation of the Business Plan
and the identification of cost reduction and other liquidity enhancement opportunities. The
professionals of FTI who have carriage of this matter, and who will have carriage of this matter
for FTI as the Monitor, have acquired considerable knowledge of the Cinrarn Group and the
Cinr~ Business since the commencement of their engagement as financial advisor. FTI is
therefore in a position to immediately assist the CCAA Parties with any restructuring process. 282 -55- 70
189. FTI has consented to act as the Monitor of the CCAA Parties in the within
proceedings {the "Monitor" ), subject to Court approval.
190. In connection with FTI's appointment as the Monitor, it is contemplated that a
Court-ordered charge over the Charged Property would be granted in favour of the Monitor, its
legal counsel, the CCAA Parties'anadian and U.S. legal counsel, the Canadian and U.S.
counsel to the DIP Agent (defined below), the DIP Lenders (defined below), the Administrative
Agent and the Lenders under the Credit Agreements, and the financial advisor to the DIP
Lenders and the Lenders under the Credit Agreements, in respect of their fees and disbursements
incurred at their standard rates and charges, and in favour of Moelis in respect of the fees and
expenses to be paid to Moelis pursuant to the engagement letter between Moelis and CII dated
September 23, 2011 (the "Administration Charge" ), which Administration Charge is to be in
an aggregate amount of CAD$ 3.5 million.
{D) Chanter 15 Proceedings
191. It is contemplated that these CCAA proceedings will be the primary Court-
supervised restructuring of the CCAA Parties. Although Cinram has operations in the United
States and certain of the Applicants are incorporated under the laws of the United States, Canada
is the nerve centre of the Cinram Group.
192. The CCAA Parties require a recognition order under Chapter 15 to ensure that the
CCAA Parties are protected from creditor actions in the United States (including under the
Credit Agreements pursuant to which the U.S. Applicants are either Borrowers or Guarantors)
and tq assist with the global implementation of the Proposed Transaction to be completed
pursuant to these CCAA proceedings. The Applicants are thus seeking authorization in the - 56- 283
proposed Initial Order for (i) Cinram ULC to seek recognition of these proceedings as "Foreign
Main Proceedings" and seek such additional relief required in connection with the prosecution of
any sale transaction, including the Proposed Transaction; and (ii) the Monitor, as a Court-
appointed officer, to assist the CCAA Parties with any matters relating to any of the CCAA
Parties'ubsidiaries and any foreign proceedings commenced in relation thereto. The Monitor
will remain actively involved in assisting Cinram ULC as the foreign representative in the
Chapter 15 proceedings and will assist in keeping this Honourable Court informed of
developments in the Chapter 15 proceedings.
193. The Applicants intend that the relief requested in the Chapter 15 proceedings will include, among other things:
a) recognition of these CCAA proceedings as "Foreign Main Proceedings";
b) establishment of Cinram ULC as foreign representative; and
c) enforcement of the Initial Order in the United States, including enforcement of the
stay of proceedings (including in respect of enforcement and termination rights of
any party against any of the CCAA Parties and the Subsidiary Counterparties), the
critical supplier provisions and the DIP Financing related provisions.
194. As mentioned previously, Cinram's European entities are not Applicants in these proceedings and it is not intended that any insolvency proceedings will be commenced with respect to Cinram's European entities except for Cinram Optical Discs, which has commenced insolvency proceedings in France. —284 -57- 72
195. As previously noted, the CCAA Parties are part of the integrated Cinram Group
headquartered in Canada with operations in Canada, the United States, and Europe. The Cinram
Group and the proposed Monitor believe that the centre of main interest ("COMI") of the CCAA
Parties is in Canada based on the following factors:
(a) the Cinram Group is managed on a consolidated basis out of the corporate
headquarters in Toronto, Ontario, where corporate-level decision-making and
corporate administrative functions are centralized;
(b) key contracts, including among others, major customer service agreements, are
negotiated at the corporate level and created in Canada;
(c) the Chief Executive Officer and Chief Financial Officer of CII, the main
operating entity in the Cinrain Group, who are also directors, trustees and/or
officers of other entities in the Cinram Group, are based in Canada;
(d) meetings of the board of trustees and board of directors typically take place in
Canada;
(e) pricing decisions for entities in the Cinram Group are ultimately made by the
Chief Executive Officer and Chief Financial Officer in Toronto, Ontario;
(f} cash management functions for Cinram's North American entities, including the
administration of Cinram's accounts receivable and accounts payable, are
managed from Cinram's head office in Toronto, Ontario; - 58-
(g) although certain bookkeeping, invoicing and accounting functions are performed
locally, corporate accounting, treasury, financial reporting, financial planning, tax
planning and compliance, insurance procurement services and internal audit are
managed at a consolidated level in Toronto, Ontario;
(h) information technology, marketing, and real estate services are provided by CII at
the head office in Toronto, Ontario;
(i) with the exception of routine maintenance expenditures, all capital expenditure
decisions affecting the Cinram Group are managed in Toronto, Ontario;
(j) new business development initiatives are centralized and managed from Toronto,
Ontario; and
(k) research and development functions for the Cinram Group is a corporate-level
activity centralized at Toronto, Ontario, including the Cinram Group's corporate-
level research and development budget and strategy.
196. It is most expedient and efficient that the restructuring of Cinram and the treatment of Cinram's debt obligations be implemented through one restructuring proceeding that is overseen and directed by this Honourable Court in Canada, which is Cinram's home jurisdiction and the centre of the CCAA Parties'anagement, business and operations. -- 2S6 -59-
(E) Fundine of the Cinram Group
(i) Cash Flow Forecast
197. A copy of cash-flow forecast prepared by the Applicants with the assistance of the
proposed Monitor is attached hereto as Exhibit "G"(the "Cash Flow Forecast" ),
198. As set out in the Cash Flow Forecast, the Applicants will require additional
funding froin the commencement of these CCAA proceedings. The principal uses of cash during
the next 13-week period will consist of the costs associated with ongoing payments made in the
ordinary course in respect of employee compensation, rent, procurement, raw materials and
supplies, utility services, and other supplier obligations, and professional fees and disbursements
in connection with these CCAA proceedings.
(ii) DlP Financing
199. As indicated in the Cash Flow Forecast, the Applicants do not have sufficient
funds available to meet their immediate cash requirements as a result of their current liquidity
challenges. The Applicants require access to DIP Financing in the amount of $15 million to: (a)
maintain sufficient minimum operating liquidity; (b) allow for payment of financial obligations
during the proposed proceedings, including obligations to employees and trade creditors, as well
as to allow the CCAA Parties to properly retain the proposed Monitor and legal counsel to advise
in relation to restructuring options and their investment banker to assist with the ongoing
strategic review and sale transaction process; {c)ensure they can implement their restructuring
initiatives, including the Proposed Transaction, and continue operations; and {d) provide -60- assurance to Cinram's suppliers and customers that the CCAA Parties have sufficient available liquidity to maintain their business operations and satisfy its supplier and customer obligations.
200, The Applicants have been offered DIP Financing &om the lenders forming the
Steering Committee (the "DIP Lenders") on commercially reasonable terms. As a result, the
Applicants did not canvas the market for other potential lenders. Because this offer for DIP
Financing did not require any alteration of Cinrain's accounts and included similar terms to facilities under the First Lien Credit Agreement, the Applicants are of the opinion that there was no commercial advantage to pursuing other arrangements for DIP Financing. In addition, the DIP
Lenders are already familiar with Cinram's business and financial profile as well as its restructuring options as a result of their involvement in discussions with Cinram's advisors throughout Cinram's strategic review process. Any other offer from other lenders would have required a great deal of time and expense to pursue, could have required a neweash management system and would have had to deal with the security granted in connection with the Credit
Agreements.
201. Conditions precedent to the availability of the DIP Financing include: (i) the entry of the Initial Order and the Interim Recognition Order (as defined in the DIP Credit Agreement
(as defined below)), each in form and substance satisfactory to the DIP Agent and the Majority
Lenders {as defined in the DIP Credit Agreement); and (ii) the payment of fees required to be paid to the Administrative Agent and the DIP Lenders pursuant to the DIP Fee Letter (as defined below).
202. Subject to certain terms and conditions, including the granting of the requested
1 Initial Order providing for a Court-ordered super-priority charge, Cinram has negotiated a —288 76
debtor-in-possession credit agreement (the "DIP Credit Agreement" ) with the DIP Lenders
through JPMorgan Chase Bank, N.A. as administrative agent (the "DIP Agent" ) whereby the
DIP Lenders agree to provide the DIP Financing in the form of a term loan in the amount of $15
million.
"H" 203. A copy of the DIP Credit Agreement is attached as Exhibit hereto. The DIP
Credit Agreement includes certain schedules which contain sensitive competitive and
confidential information. These schedules will be provided to the Court under seal and a sealing
order will be sought with respect to such information. I believe sealing these schedules to the
DIP Credit Agreement is appropriate in the circumstances.
204. In connection with the DIP Financing, CII has also entered into a fee letter {the
"DIP Fee Letter" ) with the DIP Agent, pursuant to which the DIP Lenders are entitled to
receive a fee in connection with providing the DIP Financing, and the DIP Agent is entitled to
receive an agent fee upon the Draw Date (as defined in the DIP Credit Agreement). A copy of
the DIP Fee Letter is attached hereto as Exhibit "I".
205. The DIP Financing is proposed to be secured by a Court-ordered priority security
interest, lien and charge (the "DIP Lenders'harge" ) on all the Charged Property that will
secure all post-filing advances. The DIP Lenders'harge is to have the super priority described
in Section III(l) of this Affidavit. The DIP Lenders'harge will not secure any obligation that
exists before the Initial Order is made. The Applicants considered the best interests of all their
stakeholders in securing the DIP Financing.
206. CUSH is the borrower under the DIP Financing (the "DIP Borrower" ) and the
other CCAA Parties {with the exception of the Fund Entities) are guarantors under the DIP 77 -62-
Credit Agreement {together with the DIP Borrower, the "DIP Obligers"). The DIP Borrower
will use the DIP Financing to fund, among other things, their working capital requirements. The
DIP Credit Agreement will permit the DIP Borrowers to transfer funds drawn on the DIP
Financing to DIP Obligors that are guarantors to satisfy the working capital and other liquidity
requirements during these proceedings. Absent the ability to make intercompany transfer of
funds, the Applicants would not be able to fmance their operations or pursue their restructuring
initiatives.
207. The Applicants propose that the Monitor wiH provide oversight and assistance
and will report to the Court in respect of the CCAA Parties'ctual results relative to the Cash
Flow Forecast during these proceetljngs. Existing account procedures will provide the Monitor
with the ability to track the flow of funds for the various Cinram entities.
208. Because the proposed DIP Financing is being provided by the lenders forming the
Steering Committee, who are senior secured creditors of the Applicants, the Applicants are of the
view that there will be no material prejudice to any of their existing creditors.
209. For all of the above reasons, the Applicants are seeking approval of the proposed
DIP Financing to accommodate the anticipated liquidity requireinents -during these CCAA
proceedings,
(iii) Cash Management System
210. As a result of the integration of the business and operations of the Cinram Group,
and in order to increase operational and financial efficiencies, Cinram employs a centralized cash
management system (the "Cash Management System" ) to deal with cash management, —290 -63- 78
collections, disbursements and intercompany payments. The Applicants seek the authority to
continue to use the existing Cash Management System and to maintain the funding and banking
arrangements already in place.
211. Cinram's Cash Management System for North America is primarily managed and
monitored from CII's head office in Toronto, Ontario. The Cinram Group maintains bank
accounts in Canada, the U.S. and Europe. Bank accounts maintained by Cinram's European
entities are monitored by CII but are subject to the control of the management of the local entity.
212, With a few exceptions, the accounts of the Canadian Applicants and Cinram LP
are maintained with HSBC Bank of Canada {"HSBC") and JPMorgan Chase Bank
{"JPMorgan"), and the U.S. accounts 'of the U.S. Applicants are maintained with JPMorgan. On
or around May 25, 2012, each of the U.S. Applicants opened a new Canadian-based bank
account with JPMorgan. Exhibit "J"presents a schematic diagram of the principal funds flows
between the CCAA Parties'ank accounts.
213, The primary Canadian banking and treasury functions managed through the head
office-at CII include co-ordinating North American cash management, depositing Canadian
customer payments; processing and paying vendor and other payables; funding Canadian
payroll; initiating and receiving intercompany payments to/from U.S. and European subsidiaries;
and processing and paying interest and principal payments with respect to the portion of the first
lien debt allocated to CII.
214. CII has four active bank accounts at HSBC, namely: {1)a general Canadian dollar
accourit primarily used for depositing Canadian dollar denominated customer payments and
making Canadian dollar denominated vendor payinents; {2) a general U.S. dollar account 79 -64-
primarily used for depositing U.S. dollar denominated customer payments and making U.S.
dollar denominated vendor payments; (3) a general Euro account used primarily for sending and
receiving intercompany transfers from Cinram's European subsidiaries (other than the UK-based
entities) and to process Euro-denominated payments to vendors; and (4) a general GBP account
used primarily for sending and receiving intercompany transfers from Cinram's UK-based
subsidiaries and to process GBP-denominated payments to vendors. CII also has one account
with TD Canada Trust used with respect to customer payments made by credit card, and one
U.S. dollar account with JPMorgan used to process certain U.S. dollar denominated payments
with respect to vendor and other payables.
With respect to the Q.S, Applicants, the principal operating concentration account
is with Cinram Manufacturing. Transfers are made when required between the Cinram
Manufacturing operating concentration account and the CUSH concentration'"account to facilitate
payments and advances to CII. Until the filing date, drawdowns and repayments on the secured
revolving credit facilities were made by CUSH and funded into its concentration account.
216. Cinram Manufacturing maintains a separate payroll disbursements account.
CUSH maintains a separate benefits disbursement accounts. These payroll and benefits
disbursement accounts are operated as zero-balance accounts that draw on the main Cinram
Manufacturing operating concentration account. Cinram Manufacturing also maintains a pre-
funded benefits disbursement account that holds funds for'workers'ompensation benefits under
a former workers'ompensation insurance program.
217. Each of Cinram Distribution, Cinram Wireless, Cinram, Inc., One K and Cinram
Retail inaintains a depository account for custoiner collections and other receipts and a zero- —292 -6S- 80
balance disbursement account from which payments are made and, when required to cover a
payment, draws on the applicable depository account.
218. Transfers are made between the accounts to make intercompany reimbursements,
settle (or partially settle) intercompany balances and to meet the fluctuating liquidity
requirements. Intercompany accounts are reconciled monthly. The proposed Initial Order
includes the authorization to complete intercompany transfers among the CCAA Parties (other
than between a CCAA Party that is not a Fund Entity and a Fund Entity).
219. The current Cash Management System includes the necessary accounting controls
to enable the CCAA Parties, as well as its creditors and this Honourable Court, to trace funds
through the system and ensure that all transactions are adequately ascertainable. As such, it is
hereby requested that this Honourable Court grants a continuation of the current system.
(F) Payments during the CCAA Proceedings
220. During the course of these CCAA proceedings, the Applicants intend to make
payments for goods and services supplied post-filing in the ordinary course as set out in the Cash
Flow Forecast described above and as permitted by the Initial Order.
221. It is also contemplated by the Cash Flow Forecast that employee wage and KERP
(as defined below) obligations relating to active employment will be paid in the ordinary course,
whether such obligations are incurred pre- or post-filing. - 66-
(i) Payments for Shared Services
222. There is a significant degree of administrative and operational integration among the Applicants. The Applicants share several management and operational services (the "Shared
Services" ) which are primarily provided through CII's head office in Toronto. The principal
Shared Services include: (i) management services provided by CII; (ii) certain information
technology, accounting, accounts payable, accounts receivable, financial planning, internal audit,
marketing, treasury, real estate and tax services provided by CII; and (iii) certain finance,
accounting, legal, human resources, payroll, billing, freight management, procurement and
engineering services shared among the Applicants.
223. Additional operational integration exists through the performance by certain of
the Applicants, namely CII, Cinram Manufacturing and Cinram, Inc., of replication and other
manufacturing services for each other as production volumes and plant capacities warrant. The
Applicants also share other ancillary and as-needed services, including creation of master discs
and refurbishment of production equipment parts.
224.- The costs of the Shared Services are shared among the entities receiving them
generally according to the relative revenues of the entities sharing a particular service or
function. For example, where one of Cinram, Inc, Cinram Manufacturing or CII performs
replication for another of these companies, it charges the receiving company a transfer price of
approximately 95% of the price charged by the receiving coinpany to its external customer.
Other ancillary services are exchanged approximately at cost.
225., As a result of the operational integration of the businesses, there is a significant
volume of financial transactions between and among the Applicants, including, among others, —294 -67- 82
charges by the Cinram entities providing Shared Services to other Cinram entities of
intercompany accounts due from the recipients of those services, and charges by the Cinrarn
entities that manufacture and furnish products to another Cinram entity of intercompany accounts
due from the receiving entity.
(ii) Critical Suppliers
226. Cinram relies on efficient and expedited supply of products and services from its
suppliers and service providers in order to ensure that its operations continue in an efficient
manner so that it can satisfy customer requirements. The CCAA Parties have worked with FTI,
the proposed Monitor, to identify suppliers and service providers that they have determined to be
critical to the continued operation 'of the Cinrarn Business. The CCAA Parties and FTI
considered various factors in determining these critical suppliers and service providers,
including: (i) the importance of the supplier/provider to Cinram's operations; (ii) the nature of
the goods or services supplied and whether there are alternative supply sources; (iii) the ability of
the supplier/provider to either remain in business or continue normal operations if not paid; (iv)
the ability and likelihood that the supplier/provider may delay or otherwise restrict supplying
'goods or services in the event of Cinram's non-payment; (v) the volume of the goods or services
supplied; (vi) the potential for disruption of Cinram's operations if the supplier delays or fails to
expedite supply of goods or services pursuant to their existing contracts; (vii) the ability of the
supplier to maintain a possessory lien on the property; and (viii) the amount that Cinram
currently owes to each supplier/provider.
227 It is my understanding that a stay of proceedings may require suppliers to
'I
continue to supply goods and services but will not allow the CCAA Parties to require suppliers to 83 -68-
extend credit. Furthermore, it is my understanding that, without approval from the Court,
amounts owing to suppliers in respect of pre-filing debt cannot be paid. For the reasons
discussed below, the CCAA Parties are seeking Court approval to allow (but not require) them to
pay certain pre-filing amounts to critical suppliers and service providers, but only with Monitor
approval.
Cinram relies on its extensive network of suppliers and service providers to
ensure Cinrarn's ability to provide replication and distribution services to its customers in a
timely and flexible manner. Cinram operates in a highly competitive environment where the
timely provision of its products and services is essential in order for Cinram to remain a
successful player in the industry and to ensure the continuance of the Cinram Business.
229. The provision of utilities is also necessary for the functioning of Cinram's
operations. Any interruption of the supply of power to Cinram's operations would cause
significant production problems.
230. Cinram intends to continue to rely on those suppliers and service providers with
which it has contracts or arrangements that were entered into prior to the date of the filing. The
CCAA Parties require flexibility to ensure adequate and timely supply of required products and
to attempt to obtain and negotiate credit terms with its suppliers and service providers. In order
to accomplish this, the CCAA Parties require the ability to pay certain pre-filing amounts and
post-filing payables to those suppliers they consider essential to the Cinram Business, as
approved by the Monitor. Due to Cinram's current financial circumstances, further tightening of
credit terms would be detrimental to Cinram's ability to continue its operations. The CCAA
Parties must ensure continued good relations with suppliers and service providers and be able to —296 -69-
offer them a variety of options related to the terms upon which they will continue to supply to
Cinram during these proceedings.
231. In addition, there are several suppliers who may have the ability to exercise
possessory liens or use otherwise lawful means to require the CCAA Parties to pay the amounts
outstanding to them. Any such action may disrupt Cinram's operations and negatively impact
any potential restructuring. The CCAA Parties require the flexibility to pay these suppliers or, if
applicable, to stay any exercise of such a possessory lien in order to ensure continued
uninterrupted operations.
232. As set out in further detail in the Proposed Monitor's Pre-Filing Report, the Cash
|" Flow Forecast currently contemplates the ability to make pre-filing payments to critical suppliers
when such payments are approved by the Monitor, the DIP Agent and the Administrative Agent,
in accordance with a consultation and approval process agreed to among the Monitor, the DIP
Agent, the Administrative Agent and the CCAA Parties.
(lii) Customer Programs
233. The CCAA Parties have several customer programs in place pursuant to existing
contracts or arrangements with certain of their customers, including: (1) retroactive price
adjustments resulting from a difference between certain raw material costs estimated at the time
of order and actual costs incurred by the CCAA Parties; (2) certain relocation payments in
connection with certain of the closures and consolidation efforts by Cinram previously discussed;
(3) discounts for early payments; (4) warranty claims and reimbursements for or replacements of
defective products, and (5) credits relating to pricing adjustments and refundable premiums,
among others. - 70- 297
234. In order to maintain customer relationships as part of the CCAA Parties'oing concern business, the CCAA Parties are seeking approval of the Court to continue providing certain existing customer programs in compliance with the contracts and arrangements in place with customers and to pay certain amounts owing or allow the customer application of credits in accordance with certain customer programs.
235. As set out in further detail in the Proposed Monitor's Pre-Filing Report, the Cash
Flow Forecast currently contemplates customer application of pre-filing credits and the ability to make pre-filing payments relating to customer programs when such payments are approved by the Monitor, the DIP Agent and the Administrative Agent, in accordance with a consultation and approval process agreed to among)he Monitor, the DIP Agent, the Administrative Agent and the
CCAA Parties.
(G) Kev Kmnloyee Retention Program
236. The retention of key employees has been and continues to be of vital importance
to the Cinram Group during its restructuring efforts, including preserving the value of the
Cinram Business in the context of a going concern sale. Cinram developed a key employee
retention program (the "KERP")with the principal purpose of providing an incentive for eligible
employees, including eligible officers, to remain with the Cinram Group despite the financial
difficulties that the Cinram Group is currently facing. The KERP has been reviewed and
approved by the Board of Trustees of Cinram Fund.
237. The KERP includes retention payinents to eligible employees, including eligible
officers, as well as payments to certain eligible officers in connection with a sale transaction or
capital transaction, each as described below. —298 -71-
238. Agreements with respect to the KERP Retention Payments (as defmed below)
were entered into on October 17, 2011 and agreements with respect to KERF Transaction
Payments were entered into on January 17, 2012 (as defined below) when Cinram recognized
certain risks to the retention of its key employees and officers. As a result, the Eligible
Employees and Eligible Officers have to this point relied on the KERP and are focussed on
working to complete a transaction to maximize the value of the Cinram Business.
(i) KKRP Payments
239. Cinram has identified certain existing einployees employed at Canadian and U.S.
Cinram entities that are critical to the preservation of Cinram's enterprise value, including certain
officers (the "Eligible Employees" ).
240. Under the KERP, each Eligible Employee is eligible to receive a certain
maximum amount (each a "KKRP Retention Payment" ). The KERP Retention Payments are
payable to the Eligible Employees on two milestone dates as follows, provided that in each case
the Eligible Employee remains employed by Cinram at the date of the KERP Retention Payment:
{i) 25'/o of each Eligible Employee's KERP Retention Payment on June 30, 2012, less any
required statutory deductions; and (ii) 75% of each Eligible Employee's KERP Retention
Payment on December 31,2012, less any required statutory deductions.
241. If an Eligible Employee resigns or is terminated with cause prior to the date of a
KERP Retention Payment, such Eligible Employee will not be eligible for any KERP Retention
Payments due under the KERP. If an Eligible Employee is terminated without cause at any time
prior to December 31, 2012, such Eligible Employee will remain eligible for KERP Retention -72-
Payments due under the KERP. All other terms of the Eligible Employees'mployment terms
remain unchanged.
242. In addition to the KERP Retention Payments described above, Cinram's CEO and
the CFO (each an "Eligible Officer") shall be eligible to receive a payment upon the completion
of a capital transaction and/or a sale transaction (a "KERF Transaction Payment", together
with the KERP Retention Payments, the "KERP Payments" ) up to a certain maximum amount
as incentive to remain with CII and to oversee such transactions, all with a view to maximizing
value for the Cinram Group and its stakeholders.
243 In order to qualify for a KERP Transaction Payment, the Eligible Officer must be
employed by CII, or its successor, if applicable, as of the 60th day following the closing of any
sale transaction or capital transaction, unless the Eligible Officer has been terminated without
cause or has become employed by the purchaser as a senior officer on the completion of a sale
transaction.
244. If the employment of an Eligible Officer is terminated without cause and a sale
transaction or capital transaction is completed within 6 months of such termination, the Eligible
Officer shall be entitled to receive the KERP Transaction Payment. If the employment of an
Eligible Officer is terminated with cause, the Eligible Officer shall not be entitled to any KERP
Transaction Payment for any subsequently occurring sale transaction or capital transaction. All
terms and conditions of the existing employment arrangements of the Eligible Officers with CII
remain in full force and effect.
245, The Eligible Employees and the Eligible Officers are essential for a successful restructuring of the Cinram Group and the preservation of Cinram's value during the — 300 -73- 88
restructuring process and are likely to seek alternative employment absent the KERP. It would be
detrimental to the restructuring process if Cinram were required to find replacements for Eligible
Employees and/or Eligible Officers during this critical period. It is Cinram's belief that the
KERP, including the KERP Payments payable thereunder, not only provides appropriate
incentives for the Eligible Employees and the Eligible Officers to remain in their current
positions, but also ensures that they are properly compensated for their assistance in Cinram's
restructuring process.
(ii) Aurora Facility Retention Payments
246. In connection with the transition of Cinram Distribution's Aurora facility to its
Nashville facility described above, Cinram entered into retention agreements (the "Aurora
Retention Agreements" ) with five key employees (the "Aurora Employees") critical for the
orderly closure of the Aurora facility and transition of its distribution business to the Nashville
facility. Pursuant to the Aurora Retention Agreements, each Aurora Employee is eligible to
obtain a specified retention payment (collectively, the "Aurora KERP Payments" ) provided
that such employee remains employed through the transition period and up through the closure of
the Aurora facility, and does not resign or become terminated prior thereto. It is Cinram's belief
that the Aurora KERP Payments not only provide appropriate incentives for the Aurora
Employees to remain in their current positions, but also ensure that they are properly
compensated for their assistance in the transition of Cinram Distribution's business from the
Aurora facility to the Nashville facility. 89 -74- 301
(iii) KKRP Charge
247. The maximum aggregate amount of KERP Payments and Aurora KERP Payments
is approximately CAD$ 3 million. The Applicants request a Court-ordered charge in the amount
of CAD$ 3 million over the Charged Property as security for the KERP Payments and the Aurora
KERP Payments (the "KKRP Charge" ).
248. A detailed summary of the individual KERP Payments and Aurora KERP
Payments (attached hereto as Exhibit "K")will be provided to the Court under seal and a sealing
order will be sought with respect to such information. Cinram does not wish to make the salaries
of its employees publically known, I believe sealing this information is appropriate in the
circumstances.
(H) Trustee, Director and Officer Protections
The directors {and in the case of Cinrarn Fund and CII Trust, the trustees, referred
to herein collectively with the directors as the "Directors/Trustees" ) of the Applicants have
been actively involved in the attempts to address the Applicants'urrent financial circumstances
and difficulties, including through the exploration of alternatives, communicating with the
principal secured lenders, and the commencement of the within CCAA proceedings. The
Directors/Trustees have been mindful of their duties with respect to the supervision and guidance
of the Applicants in advance of these CCAA proceedings.
250. It is my understanding that in certain circumstances directors and officers can be
held personally liable for certain of a company's obligations to the federal and provincial
governments, including in connection with payroll remittances, harmonized sales taxes, goods -- 302 -75- 90
and services taxes, workers compensation remittances, etc. Furthermore, I understand it may be
possible for directors and officers of a corporation to be held personally liable for certain wage-
related obligations to employees.
251. Cinram maintains a Trustee, Director and Officer Insurance Policy (the "Primary
DAO Policy") with Chartis Insurance Company of Canada ("Chartis") for the
Directors/Trustees and officers of the Cinram Group which expires on July 1, 2012. The current
Primary D&O Policy provides $25 million in coverage.
Cinram also maintains additional insurance coverage that follows the Primary
D&O Policy {the "Excess D8rO Policy" ) with Lloyd's of London which similarly expires on
July 1, 2012. The Excess D&O Policy provides $25 million in coverage in excess of coverage
provided by the Primary DEcO Policy.
253. In addition, Cinram maintains an insurance policy with Chubb Insurance to
provide coverage in certain circumstances where indemnification and insurance are unavailable
(the "Side D&O Policy", collectively with the Primary D&O Policy and the Excess D&O
Policy, the "DAO Policies" ) which expires on July 1, 2012 and provides up to $10 million in
coverage in excess of coverage provided by the Primary D&O Policy and the Excess DEcO
Policy. Cinram is in the process of finalizing a one year extension of the D&O Policy.
254. The D&O Policies contain several exclusions and limitations to the coverage
provided by such policies, and there is a potential for there to be insufficient coverage in respect
of the potential directors'iabilities for which the Directors/Trustees and/or officers may be
found to be responsible. -76- 303
255. The Directors/Trustees and officers of the Applicants have expressed their desire for certainty with respect to potential personal liability if they continue in their current capacities.
In order to complete a successful restructuring, including the Proposed Transaction, the
Applicants require the active and committed involvement of their Directors/Trustees and senior officers.
256. I am advised by Cinram's insurers, Chartis, Lloyd's of London and Chubb
Insurance, that if Cinram was to file for CCAA protection, and if the insurers agreed to renew the
DAO Policies, there would be a significant increase in the premium for that insurance.
257 The Applicants request a Court-ordered charge in the amount of CAD$ 13 million over the Charged Property to indemnify the Directors/Trustees and senior officers of the
Applicants in respect of liabilities they may incur in such capacities from and after the commencement of these proceedings (the "Directors'harge" ).
{I) Priorities of Charges
258, It is contemplated that the priorities of the various charges set out herein will be as follows:
a) First —the Administration Charge (to a maximum of CAD$ 3.5 million);
b) Second —the DIP Lenders'harge;
c) Third —the Directors'harge (to a maximum of CAD$ 13 million);
d) Fourth —the KERP Charge (to a maximum of CAD$ 3 million); and
e) Fifth —the Consent Consideration Charge. —304 -77- 92
259. The Initial Order sought by the Applicants provides for the Administration
Charge, the DIP Lenders'harge, the Directors'harge, the KERF Charge and the Consent
Consideration Charge (collectively, the "Charges" ) on the Charged Property, ranking in priority
to all other security interests, trusts, liens, charges and encumbrances, claims of secured
creditors, statutory or otherwise (collectively, "Encumbrances") in favour of any Person,
notwithstanding the order of perfection or attachment, except for any validly perfected security
interest in favour of a "secured creditor" as defined in the CCAA, other than any validly
perfected security interest in favour of the Administrative Agent or the Lenders under the Credit
Agreements, and with respect to the Consent Consideration Charge, subject to the prior payment
in full of all obligations under the first-out revolving credit facility. Counsel to the
Administrative Agent and the secured Lenders that are affected by the Charges have been given
notice of these CCAA Proceedings. The Initial Order provides that no Charge created by the
Initial Order shall attach to or create any claim, lien, charge, security interest or encumbrance on
the property of a customer of a CCAA Party or where a customer has title to such property,
notwithstanding that such property may be in a CCAA Party's possession,
260. The Applicants believe the amount of the Charges is fair and reasonable in the
circumstances.
IV. CONCLUSION
261. The Applicants are currently in a challenging financial position. The Cinram
Group has experienced significant declines in revenue, which has left Cinram in a position where
it cannot meet certain financial and other covenants under its Credit Agreements, In spite of the
many cost-reduction and recapitalization initiatives and the exploration of strategic alternatives 93 -78- 305
pursued over the last few years, the CCAA Parties are no longer able to meet their financial
obligations and require the protections afforded by the CCAA.
262. The within CCAA proceedings are necessary to preserve the value of the Cinram
Business with minimal disruption and to ensure the necessary availability of working capital
funds necessary to continue operations of the Cinram Business while Cinram pursues the
completion of the Proposed Transaction for the benefit of all stakeholders.
263. The Proposed Trartsaction will allow Cinram to return to a market leader in the
industry. Upon the completion of the Proposed Transaction, Cinram will be well positioned to
increase its market share in the industry based on its status as the leading service provider and
with an improved and normalized capital structure.
SWORN before me at the City of~ Toro, on June 23,201 . ek A CSmmissionei taking affidavits John Bell —306
SCHEDULE "A"
Additional Applicants
Cinram International General Partner Inc.
Cinram International ULC
1362806 Ontario Limited
Cinram (U.S.)Holding's Inc.
Cinram, Inc.
IHC Corporation
Cinram Manufacturing LLC
Cinram Distribution LLC
Cinram Wireless LLC
Cinram Retail Services, LLC
One K Studios, LLC IN THK MATTKR OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C. Court File No: CV12-9767-00CL 19S5, c. C-36, AS AMENDED
AND IN THE 1@ATTER OF A PLAN OF COMPROMISE OR ARI~GEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants ONTARIO
SUPERIOR COURT OF JUSTICE- COMMERCIAL LIST
Proceeding commenced at Toronto
AFFIDAVIT OF JOHN BELL (sworn June 23, 2012)
GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert J. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹:
Tel: (416) 979-2211 Fax: (416) 979-1234 58251A'6082975
Lawyers for the Applicants
308
This is Exhibit "M" referred to in the
affidavit of John H. Bell
sworn before me, this 14'"
day of Au ust, 2012.
A Commi sioner for(2'aking Affidavits
JONATHAN ROS$ EPQE, tt commissioner, etc., Province of Ontario, willie e Sttittsht st Letty. Sspllsl IN@ 5 Nl14 -- 309
Court File No. C'«'Q f I fog~GCL.
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THK MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.19S5,c. C-36, AS AME&NDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGKMKNT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTL&'D IN SCHEDULE "A"
Applicants
AFFIDAVIT OF MARK HOOTNICK (sworn June 23, 2D12)
I, Mark Hootnick, of the City of New Yorkin the State of New York, MAKE OATH
AND SAY:
I. INTRODUCTION
I am a Managing Director at Moelis 2 Company LLC ("Moelis"). Moelis was
engaged by Cinram International Inc. ("CII") in September 2011 to assist Cinram (defined
below) with a comprehensive and thorough review of Cinram's strategic alternatives with the
goal of maximizing value for Cinram's stakeholders. As such, I have personal knowledge of the
matters to which I depose in this Affidavit. Where I do not possess personal knowledge, I have
stated the source of my information and in all such cases believe it to be true.
CII, Cinram International Income Fund ("Cinram Fund" ), CII Trust and the
companies listed in Schedule "A" hereto are collectively referred to herein as the "Applicants".
The Applicants, together with Cinram International Limited Partnership, are collectively referred -2-
to herein as the "CCAA Parties" ). Cinram Fund collectively with its direct and indirect
subsidiaries is referred to herein as "Cinram" or the "Cinram Group". All dollar amounts
expressed herein, unless otherwise noted, are in the United States currency,
Cinram's strategic review process has culminated in a sale transaction that, as
more fully described in the Asset Purchase Agreement, the Share Purchase Offer and the Share
Purchase Agreement (each as defined below), will see Cinram Acquisition, Inc. (the
"Purchaser" ) and/or one or more of its nominees acquire: {a) substantially all of the property
and assets used in connection with the business carried on by Cinram in North America (except for certain excluded assets) (the "Asset Sale Transaction" ); and (b) all of the issued and outstanding shares of Cooperatie Cinram Netherlands UA (the "Purchased Shares" ) and thereby the business carried on by Cinram in Europe (the "Share Sale Transaction", together with the Asset Sale Transaction, the "Sale Transaction" ).
This Affidavit is sworn in support of a motion (the "Sale Approval Motion" ) by the Applicants for an Order (the "Approval and Vesting Order" ), inter alia:
(a) approving the Asset Sale Transaction pursuant to the Asset Purchase Agreement dated June 22, 2012 (the "Asset Purchase Agreement'", be(ween CII and the Purchaser;
{b) approving the Share Sale Transaction pursuant to the binding purchase offer dated June 22, 2012 (the "Share Purchase Offer") provided by the Purchaser to CII and 1362806 Ontario Limited (together with CII, the "Share Sellers" );
(c) authorizing CII to enter into the Asset Purchase Agreement and the Share Sellers to enter into the Share Purchase Offer;
(d) authorizing CII, Cinram, Inc., Cinram Retail Services LLC, One K Studios, LLC, Cinram Distribution LLC and Cinram Manufacturing LLC (collectiveiy, the "Asset Sellers" ) to complete the Asset Sale Transaction; -3-
(e) authorizing the Share Sellers to complete the Share Sale Transaction, including, without limitation, entering into a share purchase agreement in the form attached as Exhibit A to the Share Purchase Offer (the "Share Purchase Agrecmcnt") upon due exercise of the Share Purchase Offer; and
(f) upon delivery of closing ceitificates by the Couit-appointed Monitor (the "Monitor" ) in these proceedings to the Purchaser, vesting all of the Asset Sellers'ight, title and interest in and to the Purchased Assets (as defined in the Asset Purchase Agreement) and the Share Sellers'ight, title and interest in and to the Purchased Shares in the Purchaser, or one or more of its nominees, iiee and clear of all interests, liens, charges and encumbrances, other than permitted encumbrances, as set out in the Approval and Vesting Order.
II. BACKGROVND
5. As more fully described in the affidavit of John Bell, sworn June 23, 2012, (the
"Bell Affidavit" ) in support of thd Applicants'pplication for the Initial CCAA Order (as defined below), the CCAA Parties are part of a consolidated business in Canada, the United
States and Europe that is headquartered in Canada and operationally and functionally integrated in many significant respects. Cinram is one of the world's largest providers of pre-recorded multimedia products and related logistics services and is a leader in the industry for production, service, delivery and customer satisfaction, With facilities in North America and Europe, Cinram
(i) manufactures DVDs, Blu-ray discs and CDs, and provides distribution services for motion picture studios, music labels, video game publishers, computer software companies, telecommunication companies and retailers around the world; (ii) provides various digital media services through its subsidiary One K Studios, LLC; and (iii) provides retail inventory control and forecasting services through Cinram Retail Services, LLC (collectively, the "Cinram
Business" ). As discussed in the Bell Affidavit, Cinram operates in an industry where there is a
high degree of customer concentration and where production levels and cash flows in any period
are materially affected by the timing and commercial success of customer product releases. The
economic downturn in Cinram's primary markets of North America and Europe has impacted
consumers'iscretionary spending and adversely affected the industry generally. Over the past
four years, Cinram has experienced significant declines in revenue and EBITDA, resulting in
part due to customer losses, reductions in pricing and declining customer order volumes.
As more fully described in the Bell Affidavit, declining revenues and EBITDA
have made it increasingly difficult for Cinram to service its debt obligations and comply with its
financial covenants under the Amended and Restated Credit Agreement dated as of April 11„
2011 (the "First Lien Credit Agreement" ) among CII, Cinram, Inc. and Cinram (U.S.)
Holding's Inc., as borrowers, the guarantors party thereto, the lenders from time to time party
thereto, and JPMorgan Chase Bank N.A., as administrative agent, and the Second Lien Credit
Agreement dated as of April 11, 2011 (the "Second Lien Credit Agreement", together with th:;
First Lien Credit Agreement, the "Credit Agreements") among Cinram (U.S.) Holding's Inc., as
borrower, Cinram International ULC and the other guarantors party thereto, the lenders from
time to time party thereto (collectively with the lenders party to the First Lien Credit Agreement,
the "Lenders") and JPMorgan Chase Bank N.A., as administrative agent {together with the
administrative agent under the First Lien Credit Agreement, the "Administrative Agent" ).
As more fully described in the Bell Affidavit, with respect to the First Lien Credit
Agreement, as at March 31, 2012, there was approximately $233 million outstanding under the term loan facility; $ 19 million outstanding under the revolving credit facilities; and
approximately $12 million of letter of credit exposure. With respect to the Second Lien Credit —313 -5-
Agreement as at March 31, 2012, there was approximately $12 million outstanding. The Lenders
under the Credit Agreements have security over substantially all of the assets of each of the
Borrowers and Guarantors thereunder (with the exception of the Cinram Holdings GmbH and
Cinram GmbH whose guarantees are limited as a result of German corporate law).
As more fully described in the Bell Affidavit, Cinram has been unable to satisfy
certain financial covenants under the Credit Agreements and is unable to repay or refinance the
amounts owing under the Credit Agreements or find an out-of-court transaction for the sale of
the Cinram Business with proceeds that equal or exceed the amounts owing under the Credit
Agreements.
10. On June 25, 2012, tjie Applicants intend to seek an Ordei of this Honourable
Court (the "Initial CCAA Order" ) protecting the CCAA Parties fiom their creditors pursuant to
the Companies'redi(ors Arrangemenl Act, R.S.C, 1985, c. C-36, as amended {the "CCAA",
with these proceedings commenced thereunder referred to herein as the "CCAA Proceedings" ).
11. Based on my understanding from Robert J. Chadwick of Goodmans LLP
("Chadwick" ), Cinram's Canadian counsel, it is contemplated that these CCAA Proceedings
will be the primary Court-supervised restructuring of the CCAA Parties. In conjunction
therewith, the Applicants intend to commence proceedings (the "Chapter 15 Proceedings" )
under Chapter 15 of the United States Bankruptcy Code ("Chapter 1S")to seek recognition of
these CCAA Proceedings as "Foreign Main Proceedings" as soon as practicable. The Applicants
also intend to seek an order which, among other things, recognizes the proposed Approval and
Vesting Order and authorizes the sale of the Purchased Assets located in the United States, free -6-
and clear of all liens, claims, encumbrances and interests, other than permitted encumbrances
(the "Sale Recognition Order" ) under the Chapter 1S Proceedings.
12. As discussed in the Bell Affidavit, since 2009, Cinram has taken several steps in
an effort to strengthen its operational and financial position by, among other things, reducing its
debt levels, reducing its cost structure, limiting capital expenditures, and focusing on its core
business of producing standard DVDs and Blu-ray discs and related distribution services, with
the intention of disposing of non-core assets, including facility rationalization where appropriate.
13. As part of its extensive restructuring efforts, on April 11, 2011, Cinram completed
a refinancing and recapitalization transaction (the "Refinancing and Recapitalization") to,
among other things, reduce its debt and extend the maturity date of its credit facilities in an effort
to provide Cinram with increased liquidity and a more sustainable capital stnicture.
14. In the first half of 2011, results of operations disappointed due primarily to a decline in customer order volumes and as a result, Cinram sought amendments to the Credit
Agreements in August 2011 (the "August 2011 Amendment" ). In addition to certain changes to financial and other covenants, as well as certain requirements under the Credit Agreements, the
August 2011 Amendment resulted in Cinram engaging Moelis to assist in a review of its strategic alternatives (as further discussed below).
15. Continued decline in customer volumes for the fourth quarter of 2011 resulted in
Cinram seeking waivers to certain covenants in the Credit Agreements. A series of waivers extending from December 2011 through June 30, 2012, were obtained, relating to, among other things& certain financial covenants. — 315 -7-
16. Additional factual background concerning the Cinram Group and its restructuring
efforts is set foith in the Bell Affidavit.
17. Cinram has been unable to find an out-of-court solution to its financial
difficulties, and 1 do not. believe there is a reasonable expectation that the Cinram Group's
financial condition will improve absent these restructuring proceedings. Without a successful
restructuring, indications suggest that the Cinram Group's liquidity and ability to service its cash
payment obligations will deteriorate further with a corresponding erosion of the value of the
Cinram Business.
III. STRATEGIC REVIEW PROCESS
18. As noted above, pursuant to the August 2011 Amendment, in September, 2011,
Cinram engaged Moelis as investment banker to assist Cinram in a comprehensive and thorough
review of CinraiTi's strategic alternatives with the goal of maximizing value for Cinram's
stakeholders.
19. Moelis is a global investment bank that provides financial advisory, capital raising
and asset management services to a broad client base including corporations, institutions and
governments. Established in 2007, Moelis is headquartered in New Yorl& with eleven offices in
North America, Europe, Asia and Australia and employs 580 employees globally.
20. In addition to its expertise in mergers and acquisitions, recapitalization and
restructuring, capital market risk advisory and asset management, Moelis is recognized for its
leading global media practice having completed over $50 billion in transaction volume across
over 60 transactions. Moelis has a wide range of experience and relationships in all key media -8-
subsectors, having represented companies and creditors on both the buy-side and the sell-side of
transactions.
21. As part of Cinram's strategic review process, Moelis sought to identify a potential
transaction such as a sale of the company, strategic combination or new money investment from
a strategic or financial investor, while concurrently evaluating a possible stand-alone transaction
with Cinram's lenders.
Commencing in the fail of 2011, Moelis conducted preliminary discussions with
certain key parties-in-interest, including the Lenders'inancial advisors, key customers aiid
certain strategic parties. Moelis next commenced the initial stages of the marketing process by
assisting, together with Cinram management, in preparing a Confidential Information
Memorandum {the "CIM") for prospective purchasers to review upon execution of a
confidentiality agreement and began to contact prospective investors, communicating the Cinrai.,
investment opportunity and providing interested parties with a brief overview of the Cinram
Business.
Moelis undertook a comprehensive assessment of the market for the Cinram
Business to identify potential parties that might be interested in considering an acquisition or
investment transaction and contacted approximately 59 parties, including 54 financial investors
and 5 strategic parties, Approximately 26 parties executed confidentiality agreements and were
provided with the CIM and access to Cinram's data room. Moelis continued to engage with prospective bidders interested in moving Forward with the process. Non-binding proposals were requested from interested parties by January 20, 2012. 24. Several potential bidders submitted non-biiiding expressions of interest in January
2012. Upon consideration of these proposals and discussion with Cinram management, Moelis
invited each of the potential bidders to participate in the next round of the process. Cinram, its
advisors and Moelis engaged in detailed discussions with the interested parties in order to
determine the optimal structure of a potential transaction and the value that could be obtained for
the benefit of Cinram's stakeholders.
25. During February 2012, materials further detailing the Cinram Business were
prepared and Cinram management presented to each of the individual bidders, or a diligence
session was provided in lieu of a management presentation. Cinram, its advisors and Moelis
worked diligently with potential bidders, responding to inquiries, discussing the Cinram Business
and the acquisition or investment opportunity and otherwise providing the prospective bidders
with information necessary to formulate an offer for the Cinram Business.
26. On February 28, 2012, Moelis provided to each potential bidder a process letter requesting a detailed proposal (a "Detailed Proposal" ) from each bidder by March 12, 2012.
The Detailed Proposal required bidders to outline proposed transaction terms, due diligence and other conditions, and a timetable for the proposed transaction. A more limited number of second round bids were received on or about March 12, 2012, and were reviewed by Moelis, Cinram management and its advisors.
27. Moelis and Cinram continued discussions with certain of the second round bidders each of whom conducted more detailed due diligence, including telephonic and in person meetings with Cinram management and its advisors, as well as visits to key operating facilities.
Moelih requested receipt of binding indications of interest from the second round bidders by -10-
April 6, 2012, which binding proposals were to include specific details, including: (a) value and
form of consideration; (b) transaction structure; (c) assumed and excluded assets and liabilities;
(d) timing to close; (e) evidence of financing; (f) details of any proposed price adjustments; and
(g) assumptions of existing indebtedness.
In April, Moelis received an inbound inquiry from a new party expressing interest
in Cinram, who also executed a confidentiality agreement and was provided with access to the
Cinram data room. This was foUowed shortly with a formal indication of interest.
29. Moelis, Cinram management and its advisors continued discussions and
conducted meetings with the interested parties, while also continuing discussions with thc
Lenders in connection with pursuing a possible stand-alone transaction.
30. After reviewing and considering all of the submissions in the strategic reviev, process, Cinram, after discussion and consultation with Moelis, Cinraizi's other advisors and the
Lenders'dvisors, determined that the offer submitted in respect of the Purchaser was the best offer submitted in the circumstances taking into account such factors as (i) purchase price;. (!;! conditions for closing; (iii) required financing; (iv) structuring of the transaction; (v) the timeframe within which the transaction could be closed, and (vi) certainty of close.
31. Accordingly, Cinram, with the assistance of Moelis and Cinram's counsel, entered into negotiations with the Purchaser in respect of the execution of'efinitive agreements for the sale of the Purchased Assets and Purchased Shares.
32. The strategic review process culminated with the execution of the Asset Purchase
Agreement by CII and the Purchaser on June 22, 2012, and the execution of the Share Purchase —319
Offer by the Purchaser on June 22, 2012, A copy of the Asset Purchase Agreement and a copy of
the Share Purchase Offer are attached hereto as Exhibit "A" and "B", respectively. The
Purchaser has paid a deposit of $5,000,000 to JPMorgan Chase Bank to be held in escrow in
accordance with the Asset Purchase Agreement. The key elements of the Sale Transaction are
discussed below.
33. The Purchaser is a newly formed entity owned by the Najafi Companies
("Najafi"), an international private investment firm based in Phoenix, Arizona. As referenced on
the firm's website, Najafi makes selective investments up to $ 1 billion in transaction value in
companies with strong management teams across a variety of industries, taking a long-term view
on its investments and focusing i)s efforts on creating value through growth and superior
performance. Najafi's operating investments include, among others, Direct Brands (including
Columbia House), Innovative Brands, Trend Homes and Snowflake Power...
34. As noted in the Bell Affidavit, throughout the strategic review process, Cinram
kept key stalceholders, including the lenders and major customers, apprised of its progress. In
addition to discussions in connection with a potential stand-alone transaction, the lenders
engaged in extensive discussions with Cinram and its advisors from the commencement of the
process and also participated in discussions with potential bidders. Cinram and its advisors also
partook in discussions with Cinram's major customers and provided updates as to the
developments in the process. Such parties have been supportive of Cinram's efforts in pursuing
a successful restructuring of its business, including through the Sale Transaction. - 12- 320
IV. SALK TRANSACTION
35. The Sale Transaction involves the Asset Sale Transaction contemplated by the
Asset Purchase Agreement and the Share Sale Transaction contemplated by the Share Purchase
Offer and, upon exercise thereof, the Share Purchase Agreement. I am advised by Chadwick,
Cinram's Canadian counsel it is structured in this way due to certain regulatory consultation
requirements involving works councils in France, which must occur prior to the transfer of
Cinram's European business to-the Purchaser through the Share Sale Transaction, I understand
from Chadwick that the requirement involves consultation only —consent of the works councils
in France to the transaction is not required. Completion of the consultation with the applicable
French works councils is a key pre-condition to the Share Sellers'bility to accept the Share
Purchase Offer. Upon due exercise of the Share Purchase Offer, the Share Sellers and the
Purchaser shall, pursuant to the terms and conditions of the Share Purchase Offer, execute the
Share Purchase Agreement pursuant to which the Share Sale Transaction will be completed. The goal is to close the Asset Sale Transaction and the Share Sale Transaction simultaneously in
August 2012; however, the closing of the Share Sale Transaction may be extended if necessary to complete certain regulatory consultation matters and subject to the Purchaser's right to extend the closing to December 17, 2012,
(a) Asset Purchase Agreement
36. I have reviewed the Asset Purchase Agreement and note the following terms:
(i) an aggregate cash purchase price of $82,500,000 to be allocated among the Purchased Assets and the Purchased Shares, subject to certain adjustments as provided in the Asset Purchase Agreement; 321 — -13-
(ii) the purchase from the Asset Sellers of substantially all of the property and assets used in connection with the business carried on by Cinram in North America (other than certain excluded assets) (the "North America Purchased Business" ), including, without limitation, the assumption of the contracts, personal property leases, real property leases and third party licenses as set out in the Asset Purchase Agreement, pursuant to the terms
and conditions of the Asset Purchase Agreement;
(iii) the effective date of the Asset Sale Transaction is April 30, 2012 (the "Asset Sale Effective Date"), with the Purchaser entitled to the benefit of all revenues and profits of the North America Purchased Business as of the
Asset Sale Effective Date, and bearing the responsibility of all expenses and losses of the North America Purchased Business as of the Asset Sale
Effective Date&
(iv) the Purchaser will continue to fulfill obligations to customers and suppliers relating to the North America Puichased Business, as set out in the Asset Purchase Agreement;
(v) the Asset Purchase Agreement may be terminated by either party if, among other reasons, the closing does not occur on or before September 15, 2012, or such later date agreed to by both parties (the "Sunset Date");
(vi) CII shall not, and shall cause its affiliates not, to pursue an Acquisition Proposal (as defined in the Asset Purchase Agreement), except that CII
may consider an Acquisition Proposal that could reasonably be expected to lead to a Superior Proposal (as defined in the Asset Purchase Agreement) subject to the terms and conditions set forth in the Asset Purchase Agreement;
(vii) if CII terminates the Asset Purchase Agreement for the purpose of entering into a binding written agreement with respect to a Superior Proposal, or the Purchaser terminates the Asset Purchase Agreement as a -14- 322
result of: (1) CII withdrawing or seeking authority to withdraw the Approval and Vesting Order or the Sale Recognition Order; (2) CII selling, transfening or otherwise disposing of any material portion of the Purchased Assets, except in connection with the CCAA Proceedings and/or the Chapter 15 Proceedings, and except with the consent of the
Purchaser; or (3) a condition to closing not being satisfied by the Sunset Date due to a material breach by CII that cannot be timely cured, CII must pay to the Purchaser a fee in the amount of $2,250,000;
(viii) the Purchaser may nominate one or more entities to take title to the Purchased Assets;
(ix) the granting of the Approval and Vesting Order being sought by the Applicants, together with the Sale Recognition Order, the form and
substance of which have been agreed to by the Purchaser, is a condition to the completion of the Asset Sale Transaction;
{x) aside from closing deliveries, additional conditions to the completion of the Asset Sale Transaction include: (1) obtaining the regulatory approvals under the Investment Canada Act (Canada); (2) assignment of the Material Contracts (as defined in the Asset Purchase Agreement) to the Purchaser or its nominees, or a replacement thereof with new contracts in a manner acceptable to the Purchaser; (3) obtaining the consents of the Material
Customers and the European Material Customers (each as defined in the Asset Purchase Agreement); and (iv) executing the Transition Services Agreement (as defined in the Asset Purchase Agreement); and
(xi) Permitted Encumbrances include Encumbrances associated with, and
financing statements evidencing, the rights of equipment lessors under
equipment contracts and personal property leases acquired by the Purchaser as part of the Purchased Assets. —323 -15-
{b) Share Purchase Offer and Share Purchase Agreement
37. I have reviewed the Share Purchase Offer and the Share Purchase Agreement and
note the following terms:
(i) a cash purchase price of $82,500,000, less the purchase price paid for the Purchased Assets pursuant to the Asset Purchase Agreement;
(ii) the purchase from the Share Sellers of all of the issued and outstanding shares in Cooperatie Cinram Netherlands UA, and indirectly, each of its direct and indirect subsidiaries (with the exception of Cinram Iberia SL);
(iii) the Purchaser may nominate one or more entities to take title to the Purchased Shares;
(iv) the Share Sellers'bility to accept the Share Purchase Offer is conditioned upon the completion of the consultation process with the French works coilncl1s;
(v) upon due exercise of the Share Purchase Offer, the Share Sellers and the Purchaser shall execute the Share Purchase Agreement;
(vi) aside from closing deliveries, additional conditions to closing of the Share Sale Transaction include: (i) the closing of the Asset Sale Transaction in accordance with the Asset Purchase Agreement; and (ii) the cancellation or termination of all debt obligations and guarantees of Cinram's European entities to third party senior secured Ienders and the release of
all securities related thereto;
(vii) the Purchaser has the right to extend the closing of the Share Sale
Transaction up to December 17, 2012;
{viii) the Share Sellers and their affiliates shall not solicit or encourage any inquiries or proposals for, or enter into any discussions with respect to, the 324
acquisition by any other person of any shares of Cinram's European entities; and
(ix) the Share Purchase Offer may be rescinded by either party if the Asset Purchase Agreement is terminated.
V. SUPPORT AGRKKMKNT
38. As described in the Bell Affidavit, on June 22, 2012, lenders who are members
of'he steering committee with respect to the First Lien Credit Agreement and who are subject to confidentiality agreements (the "Initial Consenting Lendcrs"), Cinram I'und and the Borrowers under the Credit Agreements entered into a support agreement (the "Support Agreement" ) pursuant to which the Initial Conseriting Lenders agreed to support the Sale Transaction to be pursued through these CCAA Proceedings, More specifically, the Sale Transaction has the support of lenders representing approxi111ately 40% of the loans under the First Lien Credit
Agreement, Cinram anticipates further support of the Sale Transaction from additional lenders under the Credit Agreements following the public announcement of the Sale Transaction, A copy of the Support Agreement is attached as Exhibit "F"to the Bell Affidavit,
V. MOTION FOR APPROVAL OF THK SALK TRANSACTION
39. After completion of a comprehensive strategic review process, I believe that the
Sale Transaction represents the best available alternative in the circumstances taking into account such factors as (i) aggregate value to stakeholders, (ii) the timeframe within which the transaction could be close, and (iii) the probability of closing. The Sale Transaction enables the
Cinram Business to continue as a going concern. Additionally, through the Asset Purchase —325 - 17-
Agreement, the Share Purchase Offer and the Share Purchase Agreement, the transaction is
intended to result in a transition of ownership with minimal disruption to the business.
4p As indicated above, the Asset Purchase Agreement and the Share Purchase Offer
represent the best offer made for the Cinram Business and have been consented to by lenders
representing approximately 40% of the loans under the First Lien Credit Agreement, the Lenders
being Cinram's primary secured creditors over substantially all of the assets of the Cinram
Business.
41. I have been advised by Chadwick, Cinram's Canadian counsel that, among others,
parties with a registered security interest under the Personal Properly Security Act (Ontario) will
be served with the within motion.
VI. SEALING ORDKIX
42. Schedules 2.1(i), 4.3 and 4.6 to the Asset Purchase Agreement and Schedule I.3 to
Exhibit I to the Asset Purchase Agreement contain sensitive, competitive information of the
CCAA Parties. These schedules will be provided to the Court under seal and a sealing order will
be sought with respect to such information. I believe sealing these schedules is appropriate in the
circumstances.
VII. CONCLUSION
43. After carrying out a comprehensive strategic review process for the Cinram
Business, it became apparent that the Cinram Group would not be able to enter into a transaction
that permitted the Cinram Group to repay amounts owing to the Lenders under the Credit
1 Agreements in full and that the Cinram Group does not have the ability to refinance the Credit 326
Agreements in full. I believe that taking into account, among other factors, the transaction consideration, the nature of the purchased assets, timing and probability of closing, the Sale
Transaction contemplated by the Asset Purchase Agreement, the Share Purchase Offer and the
Share Purchase Agreement represents the best available alternative in the circumstances to the
Cinram Group and its stakeholders as a whole and the best opportunity to normalize its capital structure and preserve the value of the Cinram Business.
SWORN BEFORE ME at theWity of New York, in the State of New York, on June 23, 2012 ,'I
- -!f," r Marf& I-Iootixick
A Notary Public in apd for. the sd~~'f
MARY M. Gt ENNON Notary Pubiic, State of New York No.01GL6139228 Qualified in Kings County Commission Expires January &, 20~ 327 - 19-
SCIIEDULE "A"
Additional Applicants
Cinram International General Partner Inc.
Cinram International ULC
1362806 Ontario Limited
Cinram (U.S.) Holding's Inc.
Cinram, Inc.
IHC Corporation
Cinram Manufacturing LLC
Cinram Distribution LLC
Cinram Wireless LLC
Cinram Retail Services, LLC
One K Studios, LI.C IN THK MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C. Court File No t cw t l OXt 1985, c. C-36, AS AMENDED CV l4
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGKMKNT OF CPNRAM INTERNATIONAL INC., CINIUDI INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants
ONTARlO SUPERIOR COURT OF JUSTICE- COMMERCIAL LIST
Proceeding commenced at Toronto
AFFIDAVIT OF MARK HOOTNICK (sworn June 23, 2012)
GOODMANS LLP Barristers &, Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert J. Chadwick LSUC¹:35165K J. Wagner LSUC¹:440638 'elaney Caroline Descours LSUC¹:58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants
i6093045
co
This is Exhibit "N" referred to in the
affidavit of John H. Bell
sworn before me, this 14
day of Au ust, 2012.
A Commissjoner for ~ing Affidavits
' JONATHAN ROSS EQGE, a Commieeioner, etc., Proef neo of Ontario, while a Student at-Law. Sxpiraa May I, Nte, —330
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I' About Najafi Companies
~ Diversified ~ Direct marketing Catalog private investment firm / Ecommerce and Loyalty 8 Program ~ Invest internally generated capital Dfarcv(.xRklvni "'-' ~ French-Speaking Book
1 Club Business ~ Attracted to sectors, businesses that may be out of popular favor wr ~ Snowflake power 'iomass Power ~ Company Experienced at evaluating and acquiring
businesses in unique situations pasta ~ Fast Casual Italian Restaurant Chain ~ Track record of successful transformations ~ Areas of interest include 3 0 I R E C T ":. Direct marketing — Manufacturing Book/Music/DVD Club — Direct Marketing Home building — ~TreDd:=omes company Media ~( cgc11c)' — Internet Services ' Consumer (NgiO PT( V/E products company 8 t A tl 9 5
'nternet services for small businesses Na~afi Compan&es --332
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::,—,;...O:, „':.:,.;N, . "&"'.;.':~',.:,.„.. 0 -::,-C..:,;.m;-:.,.5 ';;;:e.,;,';c,. . ', Q& .l: ":" .-" " "& %'' 4 0 Q ~ 'e „, ., ~,,-.- ~ ~ .:c, .a) .c:-::. ":.=':m.: ' = .Q) . -.Ul=: ';m '"~'"'m': -. e = ': - c:- -- '- Q " ' s ' ' 0, E. ! ". ...O...„-At kc '-'- - tn'~': '-:- c'" 0-mm""'~ '-'@" O" . "' Q' e' ''();:R 'm ':; "'-::"'o': -'": ~~': ";i: " 'e"' ",e:; ..C I. 0:.:,~.:':.-'e: '.:, ~0,::;e,:, -'-;:~: - E.. e-'' -"':::Un.: e ~::~.'-:-~;: '.-':. -,''a):;-'.'. -.=:=.::vi'-: -.'" 'M;:: e ..L '„',,~ cc.. -. ~.::,e-: ~ -m".- e ™ o:-:- m-'~:;™:~-& , o '.. ;,, a"::0".O'i, 4 2;.'m.','v3,:;c, ~ ' ~" ~ - ~ ' "~' 333 Acquisition of Cinram
~ On June 25, 2012, Cinram reached agreements with an affiliate of Najafi Companies for the sale of substantially all of Cinram's assets and business in the US, Canada, the UK, France and Germany
~ The existing approximately $278 million of debt as of March 31, 2012 will be extinguished at the close of the acquisition, substantially improving the capitalization structure at Cinram
~ Thus, the approximately $30 million of cash interest payment as of March 31, 2012 (last twelve months) will no longer be the responsibility of Cinram at the close of the acquisition, improving Cinram's free cash flow Overview of Cinram's Income Statement
($ in 000) LTM 3/31/2012 Total Revenue $791,724 Cost of Goods Sold $663,722 Gross Margin $128,002
EBITA (excluding other charges) $13,973 EBITA $20,073 Breakdown of Cinram's Revenues and EBITA
($ in 000) LTM 3/31/2012 Revenue by Segment Pre-Recorded Multimedia Products $685,465 Video Game $43,330 Other $62,929 Total Revenue $791,724
Revenue by Geography N America $436,219 Europe $355,505 Total Revenue $791,724
EBITA By Segment Pre-Recorded Multimedia Products $2,912 Video Game $249 Other $16,912 Total EBITA $20,073
NBJQ fl C~OITl/33.ICS Overview of Cinram's 8alance Sheet
Cash adjusted to add back actual cash payment of interest/fees and debt amortization for LTM 3'i, March 2012 assuming no interest and fees for the financing leases Debt adjusted for pro forma debt capitalization assuming the close of the acquisition ($ in 000) 3/31/2012 '/31/2012 Balance Sheet Overview Actual . Adjustments Pro Forma $57,775 $72,378 $130,153 Accounts Receivable $118,104 $118,104 Inventory $21,662 $21,662 $152,441 $152,441
Total Assets By Segment Pre-Recorded Multimedia Products $341,109 $341,109 Video Game $9,061 $9,061 Other $32,102 $32,102 Total Assets $382,272 $382,272
AP $101,284 $101,284
Bank Debt $19,000 ($19,000) $0 1st Lien Debt $232,842 ($232,842) $0 2nd Lien Debt $11,997 ($11,997) $0 Financing Leases $14,397 $14,397 Total Debt $278,236 ($263,839) $14,397 Najafi Companies Shareholder's Equity ($90,567) '336,217 $245,650 —338
U I j ~II Q Q. E CL
cd
&Z History of Successful Transformations
~ Original internet:registrar, purchased by VeriSign in 2000 for $15 billion ~ VeriSign restricted'products and market development and harvested cas'h'fiom Network Solutions ~ Network: Sol'utions began restructur'ing:in 2002, Division was sold to'Najafi-".Com'panies in 2003.for':100 million ~ Broadened 'p'roduct offering to provide total online presence strateg'y:.for srrIall businesse's
~ Foc'used bu'siness.on customers and service rather than domains ~ Organic 'growth. supported by. company cash flows and internal ' development Acquired two companies with key technologies ~ Sold in March 2007 for $800 million History of Successful Transformations
+3DIRECTB RANDS I NC.
~ Music, Book, and DVD clubs acquire@from: Bertelsmann AG in August 2008 ~ Direct marketing, company with over 8 million active customer accounts and,:str'orig print and onlin'e sales;.channels ~ One of the largest direct-to-consume'r distributors of media products in the U.::S. ~ Well-known corisumer brands include "Book-.of-;,'the-.Month Club," "Doubleday.:Book Club," and. "Columbia-House" ~ Strong customei 'base and data analytics provi'de opportunities to.grow product.:categories '' ~ Transformation opportunities focused on::; ' Back-office: efficiencies ~ Online migiation ~ Digital products
NaIa6. Conxpanies U-.S. Bankruptcy Involvement
~ Private: Horn'e'bu'll'de''i"::. ~ Acquired a.sub'sta'ritIat.portIon of the assets of Trend Homes and several of its::affilia'tes: in Ju'ne 2008 ~ Effectively'execufed the purchase of assets through 363 sale process
~ Biomass Power::Plan't: ~ in auction in Snowflake Power Business was started June 2008 and put up for 2010. Najafi CornpanIes':was:designated the winner of the 363 sale after successfully defendirIg;;Its.stalking horse bid at auction - Currently Irivesti'n'g:c'apital into the business to improve and grow operations
' NR/3.fl CoIBpRD1CS IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C. Court File No: CV12-9767-00CL 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTER5lATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants
ONTARIO SUPERIOR COURT OF JUSTICE- COMMERCIAL LIST
Proceeding commenced at Toronto
AFFIDAVIT OF JOHN H. BELL (sworn August 14, 2012)
GOODMANS LLP Barristers 4 Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert J. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹:58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants
i6109609
343
Court File No. CV12 —9767 —00CL
ONTARIO SUPERIOR COURT OF JUSTICE COMMKRCIAL LIST
THE HONOURABLE ~ ~,THE"
JUSTICE ~ DAY OF ~, 2012
IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, AS AMENDKD
AND IN THE MATTKR OF A PLAN OF COMPROMISE OR ARRANGEMKNT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND T3)E COMPANIES LISTED IN SCHEDULE ccAll
Applicants
ORDER (Assignment of Contracts)
THIS MOTION, made by the Applicants pursuant to the Companies'reditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA") was heard this day at 330 University Avenue, Toronto, Ontario.
CO tO ON READING the affidavit of John H. Bell sworn August , 2012 and the Exhibits
CD thereto (the "Bell Affidavit" and the Second Report of FTI Consulting Canada Inc. in its CV ) capacity as Court-appointed Monitor (the "Monitor" ) dated August ~, 2012 (the "Monitor's CO Second Report" ), and on hearing the submissions of counsel for the Applicants and Cinram Q) International Limited Partnership (together with the Applicants, the "CCAA Parties" ), the I Monitor, the Pre-Petition First Lien Agent (as defined in the Initial Order of this Court dated June 25, 2012 (the "Initial Order" )), the Pre-Petition Second Lien Agent (as defined in the I LL Initial Order), the DIP Agent (as defined in the Initial Order) and Cinram Group, Inc. (formerly Cinram Acquisition, Inc., the "Purchaser",), and no one appearing and making submissions for —344 Page 2
any other person served with the Motion Record, although properly served as appears from the affidavit of 0 sworn August ~, 2012, filed,
SERVICE
1. THIS COURT ORDERS that the time for and manner of service of the Notice Letter, the Notice of Motion, the Monitor's Second Report and the Motion Record is hereby abridged
and validated so that this Motion is properly returnable today and hereby dispenses with further service thereof.
CAPITALIZED TERMS
2. THIS COURT ORDERS that unless otherwise indicated or defined herein, capitalized terms have the meaning given to them in the Bell Affidavit.
APPROVAL OF ASSIGNMEN'F OF CONTRACTS
3. THIS COURT ORDERS that upon the delivery by the Monitor to the Purchaser at the Closing of the Monitor's Asset Sale Transaction Certificate (as defined= in the Approval and Vesting Order of this Court dated July 12, 2012 (the "Approval and Vesting Order" )), the contracts, agreements and leases listed in Schedule "B"hereto (collectively, the "Contracts" ) to which Cinram International Inc. ("CII")is a party are assigned, conveyed and transferred to
the Purchaser or one or more entities nominated to take assignment of the Contracts in
accordance with the Asset Purchase Agreement (each, a "Purchaser Nominee" pursuant to C) ) section the 00 11.3 of Companies'reditors Arrangement Act (Canada) ("CCAA"), and CII's Cti rights and obligations under the Contracts shall be transferred to and be assumed by the Purchaser and/or a Purchaser Nominee.
C 4. THIS COURT ORDERS that, with respect to the Contracts that are real property leases tO "B" CS and listed on Schedule hereto (collectively the "Real Property Leases"), from and after the Closing, the Purchaser and/or a Purchaser Nominee shall be entitled and subject to all of the I rights and obligations as tenant pursuant to the terms of the Real Property Leases and registrations thereof and may enter into and upon and hold and enjoy each premises contemplated by the Real Property Leases and, if applicable, any renewals thereof, for its own Page 3 use and benefit, all in accordance with the terms of the Real Property Leases, without ~ny interruption from the CCAA Parties, the landlords under the Real Property Leases or any person whomsoever claiming through or under any of the Petitioner Parties or the landlords under the Real Property Leases.
5. THIS COURT ORDERS that the assignment and transfer of the Contracts shall further be subject to the provision of the Approval and Vesting Order directing that the Asset
Sell=r.'ights, title and interests shall vest absolutely in the Purchaser and/or a Purchaser Nominee free and clear of all Encumbrances (as defined in the Approval and Vesting Order) other than tie',: Permitted Encumbrances (as defined in the Approval and Vesting Order).
6. THIS COURT ORDERS that the assignment of the Contracts pursuant to this Ord": I, valid and binding upon all of the counterparties to the Contracts, notwithstanding any restriction or prohibition contained in any such Contracts relating to the assignment thercoi; including, but not limited to, any provision requiring the consent of any party to the trans..'e.":, conveyance, or assignment of the Contracts.
7. THIS COURT ORDERS that no counterparty under any Contract, nor any other per;o;-:, upon the assignment and transfer to, and assumption by, the Purchaser and/or a Purchas=r
Nominee of the Contracts hereunder shall make or pursue any demand, claim, action or su!'i .:,: exercise any right or remedy under any Contract against the Purchaser and/or a Purcha~:. Nominee relating to:
(a) the CCAA Parties having sought or obtained relief under the CCAA;
(b) the insolvency of the CCAA Parties; or
(c) any failure by the CCAA Parties to perform a non-monetary obligation under any Contract; and all such counterparties and persons shall be forever barred and estopped from taking such action, For greater certainty, nothing herein shall limit or exempt the Purchaser or a Purchaser Nominee in respect of obligations accruing, arising or continuing after the Closing under the Contracts other than in respect of items (a) - (b) above. —346 Page 4
8. THIS COURT ORDERS that CII and/or any other CCAA Party that is also party to any of the Contracts are hereby authorized and directed to, and may direct another party to, satisfy
all monetary defaults in relation to any of the Contracts, if applicable, other than those arising
by reason only of the CCAA Parties'.
(a) insolvency;
(b) commencement of proceedings under the CCAA; or
(c) failure to perform a non-monetary obligation under any Contract;
on or before the Closing, as set out in the Assignment Notice, the Supplemental Notices and/or
the Designation Notices, as applicable, or as otherwise agreed by the parties, and all payments of monetary defaults hereunder shall be in accordance with the Asset Purchase Agreement.
9. THIS COURT ORDERS What all accruals of unpaid or unbilled amounts under the Contracts in respect of the period of time prior to the Closing and asserted prior to the Closing
shall be satisfied by the applicable CCAA Party, or as such CCAA Party may direct, or shall be assumed by the Purchaser and/or a Purchaser Nominee, and any such accruals in respect of amounts asserted after the Closing or liabilities arising after the Closing shall be assumed and
satisfied by the Purchaser and/or a Purchaser Nominee, all in accordance with the Asset Purchase Agreement.
10..THIS COURT ORDERS AND DECLARES that any assignment or transfer of leases, contracts or agreements by the Asset Sellers is subject to the Sale Recognition Order issued by the United States Bankruptcy Court for the District of Delaware on July 25, 2012, authorizing the assumption and assignment of executory contracts and unexpired leases of the Asset
Sellers, and to the extent of any inconsistency between this Order and the Sale Recognition Order, this Order shall govern; provided that no inconsistency results if assumption and/or assignment of a lease, contract or agreement of the Asset Sellers forms part of the Sale Recognition Order but does not form part of this Order (or vice versa).
11. 'THIS COURT ORDERS that, following the date of this Order, including, for greater
certainty, following the Closing, upon receipt by CII of a notice of designation by the Purchaser
Q Page 5
of any additional leases, contracts or agreements not listed on Schedule "B"hereto to which Cl l is a party, including, for greater certainty, any Olyphant Contracts (as defined in the Asset Purchase Agreement) to which CII is a party, for assignment to the Purchaser and/or a Purchaser Nominee in accordance with section 9.2 of the Asset Purchase Agreement and in respect of which counterparty consent is required thereunder but not obtained (each an "Additional Assigned Contract" ), CII is authorized and directed to provide notice (a "Designation Notice" ) within three (3) Business Days (as defined in the Asset Purchase Agreement) of such receipt to the applicable counterparty to such Additional Assigned Contract of the assignment to and assumption by the Purchaser and/or a Purchaser Nominee of such
Additional Assigned Contract-, including any updated cure amount to be paid in connection with such assignment and assumption.
12. THIS COURT ORDERS that any counterparty to an Additional Assigned Contract who receives a Designation Notice shall have seven (7) Business Days from the date of such Designation Notice (the "Objection DeadIine") to provide notice to the Monitor and the
CCAA Parties of any objection it has to such assignment to and assumption by the Purchaser and/or a Purchaser Nominee of the applicable Additional Assigned Contract.
13. THIS COURT ORDERS that if the Monitor and CCAA Parties do not receive any notice of objection to the assignment to and assumption by the Purchaser and/or a Puichaser Nominee of an Additional Assigned Contract by the Objection Deadline, CII shall be authorized to assign such Additional Assigned Contract to the Purchaser and/or a Purchaser
Nominee subject to sections 3 to 10, inclusive, of this Order, which shall apply mutatis mutandis to the assignment and assumption of any Additional Assigned Contracts without any further Court order.
14. THIS COURT ORDERS that the applicable date of assignment and assumption of any Additional Assigned Contracts shall be the later of the date of service of the Designation Notice or delivery of the Monitor's Asset Sale Transaction Certificate.
15. 'HIS COURT ORDERS that if notice of an objection to the assignment to and assumption by the Purchaser and/or a Purchaser Nominee of an Additional Assigned Contract is received by the Monitor and the CCAA Parties from the counterparty to such Additional —348 Page 6
Assigned Contract by the required time, the CCAA Parties are authorized and directed to schedule a motion with this Court for the resolution of such objection.
16. THIS COURT ORDERS that, notwithstanding anything herein, the CCAA Parties may, on not fewer than ten (10) Business Days'rior written notice to the Purchaser (each such
notice a "Rejection Notice" ), cause to be rejected or disclaimed any Open Contract set forth in the Rejection Notice, subject to the right of the Purchaser, upon receipt of the Rejection Notice and prior to the rejection of the applicable Open Contract, to either (a) designate such Open Contract for assumption and assignment in accordance with the procedures set forth in Section 9.2(j) of the Asset Purchase Agreement or (b) agree in writing to reimburse the applicable CCAA Party for the out-of-pocket expenses incurred under such Open Contract from and after the date of the Rejection Notice until the date on which the Purchaser provides the CCAA Parties with notice of the Purchaser's decision as to whether to assume such Open Contract or permit its rejection, in which case the CCAA Parties shall refrain from rejecting such Open Contract until the date they receive notification of such decision from the Purchaser. The CCAA Parties shall act reasonably and in good faith in providing any Rejection Notices, including with respect to the quantity of Open Contracts set forth thereiii, and shall cooperate with the Purchaser in determining whether or not to assume any Open Contract.
GENERAL
17. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,
Cl regulatory or administrative body having jurisdiction in Canada, in the United States or in any CO Co other foreign jurisdiction, to give effect to this Order and to assist the CCAA Parties, the 0$ CV Monitor and their respective agents in carrying out the terms of this Order. All courts,
Ol tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the CCAA Parties and to the Monitor, as an officer of fO this Court, as may be necessary or desirable to give effect to this Order, to grant representative Ql status to Cinram International ULC in any foreign proceeding, or to assist the CCAA Parties I and the Monitor and their respective agents in carrying out the terms of this Order.
18. THIS COURT ORDERS that each of the CCAA Parties and the Monitor be at liberty and is hereby authorized and empowered to apply to any court, tribunal, regulatory or Page 7 349
administrative body, wherever located, for the recognition of this Order and for assistance in
carrying out the terms of this Order and any other Order issued in these proceedings.
19. THIS COURT ORDERS that the CCAA Parties may apply to this Court for advice and direction, or to seek relief in respect of any matters arising from or under this Order, including without limitation, as necessary, to effect the transfer of the Contracts (including any transfer of title registrations in respect of such Contracts), the interpretation of this Order or the
implementation thereof, and for any further order that may be required, on notice to any party likely to be affected by the order sought or on such notice as this Court requires.
Cl 00 0$ CV
P4a
40 Ql cL' —350
SCHEDULE A
Additional Applicants
Cinram International General Partner Inc. Cinram International ULC 1362806 Ontario Limited Cinram (U.S.)Holding's Inc. Cinram, Inc. IHC Corporation Cinram Manufacturing LLC Cinram Distribution LLC Cinram Wireless LLC Cinram Retail Services, LLC One K Studios, LLC
Cl 00 t0
T N Ul
I 351
Schedule "8"
Listed Closing Assigned Contracts
Cinram Parties Counterparties Agreement
Cinram International Inc. EMI Music Canada Manufacturing and Distribution Services Agreement (Canada)
Cinram International Inc. Universal Music Canada Inc. Manufacturing Agreement
Cinram International Inc. Take- Two Interactive Guaranty Software, Inc. and Jack Of All Games, Inc.
Cinram International Inc. nuBridges, LLC Software License Agreement
Cinram International Inc. KNAPP Logistics and Hotline Contract Automation, Inc.
Cinram International Inc. Computer Associates Canada License Agreement Ltd.
Cinram International Inc. Infor Global Solutions PRMS Software License Agreement
Cinram International Inc. Xerox Canada Ltd. Total Document Solutions Agreement
Cinram International Inc. Nugget Avenue (Phase I) Inc. Lease
Cinram International Inc. Macrovision Corporation Intellectual Property License for ! Macrovision's Technologies
Cinram International Inc. Matsushita Electric Industrial, Settlement and License Agreemem Co., Ltd.
Cinram International Inc. DVD Format/Logo Licensing DVD Format/Logo License Corporation Agreement
Cinram International Inc. Rovi Solutions Corporation CopyBlock Letter Agreement
Cinram International Inc. Time Warner Inc. and Pioneer Pioneer Cross-License Acceptance Corporation and Assumption Agreement -- 352
Cinram Parties Counterparties Agreement
Time Warner Inc. Pioneer Corporation Cross-License Agreement assigned to Cinram International Inc. per Pioneer Cross-License Acceptance and Assumption Agreement
Cinram International Inc. Sony DADC Austria AG Authorized Replicator Agreement Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:6024) Ltd. Cinram International Inc. G.N Johnston Equipment Co. Lease Agreement (Lease ¹:6026) Ltd.
Cinram International Inc. G.N. JohnstonEquipmentCo. Amendment to Equipment Lease Ltd. (Lease Number 6072/4918) Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:6859) Ltd. Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:6905) Ltd. Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:6906) Ltd. Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:6970) Ltd. Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:7200) Ltd.
Cinram International Inc. G.N.JohnstonEquipmentCo. Amendment to Equipment Lease Ltd. (Lease Number 7200/9053) Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:7689) Ltd. Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:7690) Ltd. Cinram'International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease ¹:7691) Ltd. 353
Cinram Parties Con nterparties Agreement
Cinram International Inc. G.N. Johnston Equipment Co. Lease Agreement (Lease 0: 7762) Ltd.
Cinram International Inc. Manufacturers Life Insurance Employee Benefits Policy 901735 Company
Cinram International Inc. HR Technologies Sales Agreement
Cinram International Inc. HR Technologies Software Maintenance Agreement
Cinram International Inc. HR Technologies Hardware Maintenance Agreement
Cinram International Inc. PHH Vehicle Management Card Services Agreement Services Inc.
16109898 IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, R.S.C.19S5, Court File No: CV12 —9767 —'00CL c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants
ONTAMO SUPERIOR COURT OF JUSTICE- COMMERCIAL LIST
Proceeding commenced at Toronto
ORDER
GOODMANS LLP Barristers k, Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert J. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹:58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants 56108815
C) 00
O4 C) IN THE MATTER OF THE COMPANIES'REDITORS ARRANGEMENT ACT, Court File No. CV12-9767-00CL R.S.C.19S5,c. C-36, AS AMENDED AND IN THE MATTER OF THE PLAN OF COMPROMISE OR ARRANGEMENT OF CINRAM INTERNATIONAL INC., CINRAM INTERNATIONAL INCOME FUND, CII TRUST AND THE COMPANIES LISTED IN SCHEDULE "A" Applicants
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
MOTION RECORD (Returnable August 21, 2012)
GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7
Robert J. Chadwick LSUC¹:35165K Melaney J. Wagner LSUC¹:44063B Caroline Descours LSUC¹:58251A
Tel: (416) 979-2211 Fax: (416) 979-1234
Lawyers for the Applicants
i6110340